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South Korea’s KakaoBank considers partnerships with digital currency exchanges

KakaoBank, South Korea’s biggest neobank and a subsidiary of internet behemoth 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 while speaking during the company’s quarterly business performance conference. Yun stated that the internet first bank is currently reviewing a partnership with a local digital currency exchange.

“As [crypto] is considered a major asset amongst customers, we are reviewing how we can provide virtual assets in services or in the form of a business in a favorable light,” the KakaoBank executive said.

Under the plan, the bank will enable the digital exchanges it partners with to comply with South Korea’s digital currency regulations. The country requires that digital currency exchanges have banking partners to provide real-name verification services for users.

Before the conference, reports indicated that the neobank had already sealed a deal to become the banking partner of Coinone. Yun’s statement did not accept or deny the rumors. 

Coinone currently has a banking deal in place with NongHyup (NH) Bank. Albeit, the partnership is a rolling six-month renewable contract, and the speculation was based on the possibility that KakaoBank would take over once it elapsed. 

Meanwhile, KakaoBank also reported its highest-ever operating income at the performance conference. In Q1, the bank’s operating income reached KRW 88.4 billion (US$70.14 million), a 63.8% year-over-year growth.

KakaoBank still faces stiff competition and regulatory troubles

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

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

In other news, the digital currency firms, as well as tech companies in South Korea, continue to be hounded by regulators. Kakao, the parent company of KakaoBank, saw its shares tumble as the regulatory watchdogs went after its founder earlier this year, Bloomberg reports.

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

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