Banks request licensing for digital asset business

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By Lee Min-hyung

Commercial banks here have urged the government to issue licenses for them to operate digital asset businesses amid ever-toughening competition against big tech firms that are expanding their financial presence at a rapid pace.

They submitted the request to the Financial Services Commission (FSC), which has pledged to ease a set of regulatory hurdles that the financial industry faces, so industry players can remain agile in their ongoing digital transformation.

Industry officials said nothing specific has been confirmed for the time being over their possible expansion in the nascent growth area. But banks can seek new revenue sources and more partnerships with digital asset players if the authority eases relevant regulations, they said.

“Even if most banks do not have any specific vision toward digital asset businesses, they have made efforts in areas such as blockchain and central bank digital currency (CBDC), both of which are closely related with digital assets,” an official from a major commercial lender said.

Banks called on the authority to help them operate their own digital asset businesses once the National Assembly enacts a digital asset industry act.

“This does not mean that they want to acquire an existing crypto exchange or launch their own crypto trading platform,” the source said. “But they can expand into the untapped areas more easily if watchdogs ease the relevant rules.”

Most lenders here have complained for years about the government's “reverse discrimination” against conventional banking groups at a time when big tech firms ― such as Naver and Kakao ― are expanding their footing rapidly into finance, which banks argued was made possible due to regulatory grey areas.

But banks have had to face tight regulatory hurdles and focus on conventional revenue sources, unlike the two dominant internet and mobile platform operators.

Another bank industry source said banks have keen interest in trending digital asset businesses such as non-fungible tokens (NFT) and CBDC but they have had to keep a low profile in the areas due to regulatory pressure.

“Digital transformation is the top priority for most banks, so they pay more attention to digital asset businesses, even if they do not guarantee any immediate earnings returns,” the official said.

For instance, banks can hold a series of special promotional activities by embracing digital asset businesses once regulatory hurdles are eased, according to him.

“But no specific direction has been confirmed, at a time when the crypto industry is still in the legally grey area,” the source said. “It is too early to fix a detailed digital asset business strategy even at a time when no legal safeguards have been introduced to protect crypto investors, but easing rules on banks to expand their digital asset businesses, in itself, will help the banks seek more opportunities in their ongoing digital transformation.”