Shinhan Financial Group has temporarily suspended its review of investment in Korbit, one of the four largest virtual asset exchanges in Korea.
The group halted its Korbit investment review in April. “It is true that we stopped the investment review,” a Shinhan Financial Group official said. “We can discuss it again later, but we will not resume our review in the near future.”
The reason for the suspension is that financial authorities have a negative view on virtual assets. “Financial authorities negatively view financial companies’ equity investment in virtual asset exchanges,” said an IB industry insider familiar with the matter. “Due to the Terra-Luna fiasco, financial companies will refrain from investing in virtual asset exchanges for the time being.”
The first virtual asset exchange launched in Korea, Korbit is one of the top four players in Korea based on trading volume. Nexon’s holding company, NXC, and SK Square hold 48 percent and 35 percent of the exchange, respectively.
Shinhan Financial Group has promoted since March a plan to invest tens of billions of won in Korbit, through the One Shinhan Connect New Technology Investment Fund under the management of Shinhan Capital, to acquire a double-digit (less than 20 percent) stake in the exchange. The group was expected to become the third-largest shareholder of Korbit when the investment plan was fully executed.
At the moment, financial authorities are negative about financial companies’ investment in virtual asset exchanges. But financial companies are planning to include banks’ advancement into non-financial services and virtual asset management services in their policy recommendations to be submitted to the government
A financial regulation reform plan will be delivered to financial authorities with the official inauguration of Kim Joo-hyun as chairman of the Financial Services Commission. The plan plan calls on financial authorities to add virtual asset services to the banking business under the Banking Act so that banks receiving public trust can enter the market.
Financial authorities have not allowed financial companies to directly enter the virtual asset business because doing so would give the impression that the government officially recognizes virtual assets. An amendment to the Act on the Reporting and Use of Specific Financial Transaction Information is the only legal regulation in the actual virtual asset market. It focuses only on preventing money laundering, but the government has yet to enact a law related to virtual asset industry promotion. This explains why financial companies are trying to enter the virtual asset market indirectly through equity investment in virtual asset exchanges.
“Although the virtual asset market is stagnant now, the global virtual asset market is growing rapidly enough to eclipse the size of the stock market,” a virtual asset industry insider said. “I understand that the government is mulling over plans to promote the sound growth of the virtual asset market in Korea.”