South Korean Neobanking Heavyweights Kakao Bank, Toss to Expand Crypto Operations

Kakao Bank and Toss Bank, two of South Korea’s biggest neobanking players, are set to expand their range of crypto and stablecoin-related operations.

Per a report from Yonhap’s Infomax, Kakao Bank is set to broaden the range of its partnership with the domestic crypto exchange player Coinone.

The bank is an affiliate of the Kakao Group, which operates the KakaoTalk chat app and the e-payments platform Kakao Pay.

The news agency wrote that the bank is carefully monitoring market trends and regulations in the crypto sector.

Kakao and others are reportedly expecting imminent developments in the “domestic legal and institutional environment for cryptoassets.”

Since 2019, successive South Korean governments have pursued a conservative approach to crypto regulation.

This has culminated in a total ban on domestic coin launches and a blanket ban on corporate crypto investment.

Banks and other financial institutions have also been reduced to a peripheral role in the crypto space, despite their once-grand plans of becoming major crypto custody players.

That all looks set to change after June 3’s elections, with new President Lee Jae-myun taking a decidedly progressive stance on crypto policy.

One of Lee’s key manifesto pledges was the launch of a Korean won-backed stablecoin. And his government appears ready to attempt to deliver on its promise by fast-tracking a draft stablecoin bill.

Businesses like Kakao appear keen to ensure they can hit the ground running if they are given the green light to enter the market.

Yonhap wrote that the company is now “making advanced preparations to be able to quickly enter the sector.”

It added that in June, Kakao Bank applied for a total of 12 trademarks in three crypto-related categories, namely:

• crypto-related software
• crypto financial transactions
• crypto mining

Kakao Bank has also rolled out new Coinone-related crypto services for its tradfi customers. These include real-time cryptoasset price checking functions and crypto wallet links.

As such, Coinone wallet holders can check the balance and KRW worth of their crypto wallets directly from the Kakao Bank app interface.

New functions will also indicate the book value of crypto investments, and loss or gain-related statistics.

Kakao Bank said that it would continue to look for new cooperation opportunities with Coinone and look to deepen its “participation in the cryptoassets market.”

In April this year, the bank added a Coinone-linked “invest in crypto” function to its banking app.

Kakao Bank has an exclusive partnership deal with Coinone, meaning that all of the exchange’s customers who want to use the KRW market must open dedicated bank accounts with the financial provider.

The bank may also look to expand its crypto operations overseas. It has recently secured an operating license in Thailand. Yonhap wrote:

“More than 20% of the Thai population owns cryptoassets, per some estimates. That is the highest rate in the world. This could also be a good environment for Kakao Bank to consider moving into in the future.”

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As discussions on crypto continue to advance in the National Assembly, share prices in both Kakao Bank and Kakao Pay continue to show growth.

The same media outlet also reported that Toss Bank wants to become a member of the Open Blockchain and DID Association (OBDIA). The OBDIA was granted permission to operate as a non-profit corporation by the Ministry of Science and ICT in 2018.

But interest in the organization has revived this year after it added a dedicated stablecoin division.

The division has been tasked with looking into the viability of institutionalizing stablecoins in South Korea. The body currently counts nine banks among its members, namely:

• IBK Industrial Bank
• Kookmin Bank
• Nonghyup Bank
• Suhyup Bank
• Shinhan Bank
• Woori Bank
• KEB Hana Bank
• IM Bank
• K Bank

K Bank is the official partner bank of the market-leading crypto exchange Upbit.

Other major financial institutions have also joined the group, such as the Korea Financial Telecommunications and Clearings Institute.

Yonhap wrote that OBDIA is also considering establishing a joint corporation that could jointly issue stablecoins.

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Toss Bank has also applied for a total of 48 stablecoin-related trademarks, including KRWTSB.

Existing OBDIA members have done likewise. Kookmin applied for stablecoin-related trademarks on June 23, with KEB Hana Bank also applying for a total of 16 related trademarks, including HanaKRW, on June 25.

Meanwhile, the Financial Services Commission (FSC) has told the State Affairs Planning Committee that the country needs new legislation to create a safer investment environment for domestic crypto traders.

The FSC wants to establish new stablecoin regulations to “ensure global consistency and protect users” as more retail investors continue to join the market.

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