South Korean Financial Institutions More Eager to Pursue Cryptocurrency Alternative Solutions – Report

South Korean banks are increasingly eager to establish lucrative new partnership agreements with the country’s leading cryptocurrency exchange players, according to a report.

As reported by Newspim, several banks are monitoring developments at the market-leading exchange Upbit. The contract between Upbit and the neobank Ok Bank is “about to expire.”

More South Korean Banks Seeking Crypto Exchange Partnerships?

Banks are particularly motivated to act following news that regulators are expected to finally allow South Korean companies to purchase Bitcoin (BTC) and other tokens using their balance sheets later this year.

Trading volumes on the South Korean market-leading crypto exchange Upbit over the previous month. (Source: CoinGecko)

Consequently, the outlet noted, the domestic “cryptoasset market is likely to expand significantly in the latter half of the year.”

Banks are responding by “intensifying competition for partnerships” with crypto exchanges. The outlet elaborated:

“Initially, banks were somewhat hesitant to collaborate with exchanges due to security concerns. However, the sentiment has shifted in recent times.”

While demand is increasing, supply remains limited. Currently, only five crypto exchanges possess licenses that enable them to offer KRW-crypto pairings.

However, one of these, GOPAX, has been facing financial difficulties for several months, following a failed acquisition attempt by Binance.

The media outlet reported that KEB Hana Bank and Woori Bank, neither of which are currently “affiliated with” any domestic exchanges, are “monitoring the contract situation at Upbit.”

The contract with Ok Bank is set to expire in October.

Bithumb’s Recent Move

In recent weeks, reports from South Korea have indicated that Upbit and Hana have engaged in partnership discussions. However, Newspim stated that Upbit, Hana Bank, and Ok Bank have all denied the validity of these claims.

Upbit’s closest competitor, Bithumb, recently terminated its partnership with Nonghyup Bank in favor of a groundbreaking agreement with Kookmin Bank, South Korea’s largest bank.

Banks are also believed to be keeping an eye on Coinone’s arrangement with Ok Bank rival and fellow neobank Kakao Bank, as well as Korbit’s partnership with Shinhan Bank.

These recent developments all “represent” a significant “shift in banks’ attitudes” towards the crypto industry, the news outlet reported.

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— Bloomberg Economics (@economics) February 13, 2025

What Are Banks Aiming to Achieve from Crypto Partnership Deals?

Experts believe that when larger South Korean companies begin trading BTC and other tokens, it will enhance market liquidity and “create new opportunities.”

Banks are also anticipating further growth in the number of retail investors entering the crypto markets.

Officially, banks remain cautious about their intentions, but two have been quoted as saying they are exploring “various collaboration” options “with cryptoasset exchanges.”

However, the media outlet noted that both Hana and Woori are “in urgent need of growth” in areas beyond their core banking operations.

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— The Korea Herald 코리아헤럴드 (@TheKoreaHerald) February 17, 2025

Ok Bank and Upbit

Ok Bank and Upbit have maintained a successful partnership that has lasted most of the decade thus far.

This partnership notably flourished during the coronavirus pandemic, as both benefited from Ok Bank’s neobanking platform, which allowed new customers to register via their mobile devices instead of visiting bank branches in person.

Ok Bank has also suggested that it already possesses significant advantages over its more traditional competitors.

The neobank claims to have over 6,000 corporate clients. It also provides crypto wallet-linked bank accounts for “49 government agencies, including district prosecutors’ offices and tax offices.”

Tax authorities utilize these wallets to hold funds seized from tax evaders. Prosecutors use these wallets to retain the money they confiscate from criminal suspects.

Some Bankers Remain Cautious

Despite the newfound enthusiasm for crypto within the South Korean banking sector, some are still advocating for caution.

An unnamed official from a South Korean bank told the media outlet:

“We cannot yet dismiss the possibility that [individuals] are laundering funds of unknown origin on the platform. In this scenario, financial institutions must take responsibility. And this could undermine a bank’s credibility. We are not ruling out partnerships with [crypto firms]. However, we are still adopting a cautious approach.”

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