Kakao Bank Expands Crypto Operations Amid South Korea's Progressive Policy Shift

Kakao Bank and Toss Bank, two of South Korea’s leading neobanking players, are poised to expand their crypto and stablecoin-related operations. Kakao Bank, an affiliate of the Kakao Group, which operates the KakaoTalk chat app and the e-payments platform Kakao Pay, is set to broaden its partnership with the domestic crypto exchange player Coinone. The bank is closely monitoring market trends and regulations in the crypto sector, anticipating imminent developments in the domestic legal and institutional environment for cryptoassets.

South Korea has historically taken a conservative approach to crypto regulation, culminating in a ban on domestic coin launches and corporate crypto investment. However, the election of President Lee Jae-myun has brought a more progressive stance on crypto policy. One of Lee’s key manifesto pledges was the launch of a Korean won-backed stablecoin, and his government appears ready to fast-track a draft stablecoin bill. Businesses like Kakao are preparing to enter the market swiftly if given the green light.

Kakao Bank has applied for 12 trademarks in three crypto-related categories: crypto-related software, crypto financial transactions, and crypto mining. The bank has also rolled out new Coinone-related crypto services for its traditional finance customers, including real-time cryptoasset price checking functions and crypto wallet links. These services allow Coinone wallet holders to check the balance and KRW worth of their crypto wallets directly from the Kakao Bank app interface. New functions will also indicate the book value of crypto investments and loss or gain-related statistics. Kakao Bank plans to continue seeking new cooperation opportunities with Coinone and deepen its participation in the cryptoassets market. The bank has an exclusive partnership deal with Coinone, requiring all of the exchange’s customers who want to use the KRW market to open dedicated bank accounts with the financial provider. Kakao Bank may also look to expand its crypto operations overseas, having recently secured an operating license in Thailand.

Toss Bank, another major player, is also making significant moves in the crypto space. The bank has applied for 48 stablecoin-related trademarks, including KRWTSB. Toss Bank is interested in becoming a member of the Open Blockchain and DID Association (OBDIA), which was granted permission to operate as a non-profit corporation by the Ministry of Science and ICT in 2018. The OBDIA has added a dedicated stablecoin division tasked with looking into the viability of institutionalizing stablecoins in South Korea. The body currently counts nine banks among its members, including IBK Industrial Bank, Kookmin Bank, Nonghyup Bank, Suhyup Bank, Shinhan Bank, Woori Bank, KEB Hana Bank, IM Bank, and K Bank. Other major financial institutions, such as the Korea Financial Telecommunications and Clearings Institute, have also joined the group. The OBDIA is considering establishing a joint corporation that could jointly issue stablecoins.

Existing OBDIA members, including Kookmin and KEB Hana Bank, have also applied for stablecoin-related trademarks. The Financial Services Commission (FSC) has emphasized the need for new legislation to create a safer investment environment for domestic crypto traders. The FSC aims to establish new stablecoin regulations to ensure global consistency and protect users as more retail investors join the market. This regulatory shift is expected to pave the way for increased participation from financial institutions in the crypto space, potentially leading to a more integrated and secure crypto ecosystem in South Korea.