South Korea’s KakaoBank considering partnerships with digital currency exchanges

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KakaoBank, South Korea’s largest neobank and a subsidiary of internet giant Kakao, is considering a partnership with digital currency exchanges in the country.

A local report reveals that KakaoBank CEO Yun Ho-young confirmed the plan during a speech at the company’s quarterly business performance conference. Yun said the first internet bank is currently considering a partnership with a local digital currency exchange.

“Like [crypto] is seen as a strong asset among customers, we are looking at how we can provide virtual assets as a service or as a business in a favorable light,” the KakaoBank executive said.

As part of the plan, the bank will allow digital exchanges it partners with to comply with South Korea’s digital currency regulations. The country requires digital currency exchanges to have banking partners to provide real-name verification services to users.

Prior to the conference, reports indicated that the neobank had already reached an agreement to become Coinone’s banking partner. Yun’s statement neither accepted nor denied the rumors.

Coinone currently has a banking agreement with NongHyup (NH) Bank. However, the partnership is a six-month renewable contract, and speculation was based on the possibility of KakaoBank taking over once it expires.

Meanwhile, KakaoBank also announced its highest-ever operating profit at the performance conference. In the first quarter, the bank’s operating profit reached KRW 88.4 billion (USD 70.14 million), a year-on-year growth of 63.8 percent.

KakaoBank still faces fierce competition and regulatory issues

KakaoBank’s motivation to partner with digital currency exchanges may also be driven by the performance of its main local rival KBank. Last year, the sister neobank had a partnership with Upbit, South Korea’s largest digital currency exchange by trading volume.

The partnership catapulted the bank to its highest and first-ever annual surplus. KBank also plans to go public in 2022, fueled by its success following the digital currency exchange partnership.

In other news, digital currency companies, as well as tech companies in South Korea, continue to be harassed by regulators. Kakao, the parent company of KakaoBank, saw its shares tumble as regulators cracked down on its founder earlier this year, Bloomberg reports.

However, the industry hopes that the newly elected government will be much more balanced in regulating the industry. Already, President-elect Yoon Suk-yeol has revealed plans to suspend all forms of digital currency taxation until consumer protection regulations are put in place.

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