Financial groups expand equity investments, joint ventures in crypto business

Shinhan Capital considers acquiring stake in Korbit

By Heybodycrypto

Major financial groups in the country are actively seeking business opportunities in the crypto industry, expanding equity investments and also setting up joint ventures. Shinhan Financial Group, for instance, is trying to strengthen its blockchain portfolio, while its subsidiary, Shinhan Capital, mulls over investing in Korbit, one of four major cryptocurrency exchanges in Korea.

Yet the financial giant denied a market rumor that it would invest more than 50 billion won ($41 million) to become the cryptocurrency exchange's third-largest shareholder.

"It's true that Shinhan Capital's venture fund is currently examining whether to make an investment in Korbit, yet the exact amount of the investment hasn't yet been decided," an official from Shinhan Financial Group told The Korea Times.

The official explained that Shinhan Capital's venture fund has invested in various digital industries, including blockchain and NFT-related businesses. When considering that the total amount of investment assigned for the fund is 300 billion won, and that 180 billion won has already been invested, the actual amount of investment into Korbit will be less than half of what the market had anticipated, even if the deal is signed in the end.

"Even if the investment into Korbit is realized in the near future, it is still unknown whether Shinhan Capital will be taking old shares of the cryptocurrency exchange or joining in the issuance of new shares. As of now, the deal has yet to be disclosed in detail or even be signed," the official added.

While discussions are still going on regarding the detailed conditions of the investment, the partnership between Shinhan Bank and Korbit is one of the main reasons why Shinhan Capital is mulling over its possible investment in Korbit.

Shinhan Bank first agreed on a partnership with Korbit in January 2018, in which Shinhan Bank will provide a link between customers' banking accounts and the exchange's digital wallet. The partnership, which is renewed every six months for the renewal of the contract, has been extended so far.

Founded in 2013, Korbit is the country's first cryptocurrency exchange. It is currently one of Korea's four major coin exchanges, along with Upbit, Bithumb and Coinone. NXC, the holding company of gaming giant Nexon, acquired the exchange in 2017, and it is still the largest shareholder of the exchange, with a 64-percent of stake.

In January of this year, SK Square invested 60 billion won into the cryptocurrency exchange, stepping up as its second largest shareholder with a 33-percent stake. The corporate value of the exchange back then was estimated at around 283 billion won.

Financial groups actively engage in crypto business ventures

Other financial groups are also aiming to enter the country's burgeoning cryptocurrency market either in the form of equity investments or joint venture businesses. Market insiders explain that since cryptocurrency's legal status hasn't been fully established yet, the most stable way for traditional financial giants to advance into the market is by strengthening partnerships with blockchain companies.

Shinhan Bank, KB Kookmin Bank, Woori Bank and NH NongHyup Bank have already established partnerships with blockchain firms in order to expand into the crypto custody services market.

KB Kookmin was the first traditional bank to enter into the market, jointly launching the Korea Digital Asset (KODA) venture in November 2020, along with Haechi Labs and Hashed. The bank also recently completed trial development of a multi-asset digital wallet based on Klaytn, Kakao's blockchain currency. KB Investment, KB Financial's other subsidiary, has also invested some 10 billion won in GOPAX, one of the key cryptocurrency exchanges in Korea last month.

Shinhan Bank also invested in Korea Digital Asset Trust (KDAC), a cryptocurrency asset firm, in January of 2021, following an MOU in October 2020. Shinhan Card is also the first local card company to introduce customized NFT services.

Woori Bank also set up a digital asset custody joint venture with Coinplug, a fintech firm, in July of last year, becoming the country's third major commercial bank to enter the digital asset custody market.

NH NongHyup Bank made a partnership with Cardo, a blockchain firm, in September last year, acquiring equity in the firm. The bank is also providing bank account linkages to two cryptocurrency exchanges, Bithumb and Coinone.