Shinhan Financial Group has temporarily suspended its review of investments in Korbit, one of the four largest virtual asset exchanges in Korea.
The group halted its review of Korbit investments in April. “It is true that we have stopped reviewing investments,” said an official from Shinhan Financial Group. “We can talk about it later, but we won’t be resuming our review in the near future.”
The reason for the suspension is that financial authorities have a negative view of virtual assets. “Financial authorities frown on equity investment by financial companies in virtual asset exchanges,” said an IB industry insider familiar with the matter. “Due to the Terra-Luna fiasco, financial firms will refrain from investing in virtual asset exchanges at this time.”
The first virtual asset exchange launched in Korea, Korbit is one of the top four players in Korea by trading volume. Nexon’s holding company, NXC, and SK Square own 48% and 35% of the exchange, respectively.
Shinhan Financial Group has since March promoted a plan to invest tens of billions of won in Korbit, through the One Shinhan Connect New Technology investment fund under the leadership of Shinhan Capital, to acquire a double-digit stake (minus of 20%) in the exchange. The group was to become Korbit’s third shareholder once the investment plan was fully executed.
At present, financial authorities are negative about investments by financial companies in virtual asset exchanges. But financial companies plan to include the advancement of banks in non-financial services and virtual asset management services in their policy recommendations to be submitted to the government.
A financial regulatory 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 calls on financial authorities to add virtual asset services to the banking business under the banking law so that banks with public trust can enter the market.
Financial authorities have not allowed financial companies to enter the virtual asset business directly, as it would give the impression that the government officially recognizes virtual assets. An amendment to the law on the reporting and use of specific information on financial transactions is the only legal regulation on the real market of virtual assets. It only focuses on the prevention of money laundering, but the government has yet to enact any law relating to the promotion of the virtual asset industry. This explains why financial companies try to enter the virtual asset market indirectly through equity investments in virtual asset exchanges.
“Although the virtual asset market is currently stagnating, the global virtual asset market is growing fast enough to eclipse the size of the stock market,” said a virtual asset industry insider. “I understand that the government is considering plans to promote the healthy growth of the virtual asset market in Korea.”