If there is one rather intriguing trend in the financial sector, it is how banks are preparing to support digital currency and cryptocurrency services. Shinhan Bank in South Korea has been working on a virtual money deposit service. This is a rather interesting development, considering that the bank was awarded a contract to provide custodial services related to virtual currencies.
In a way, it was only a matter of time before banks and other financial institutions got on the virtual currency bandwagon. Although most institutions continue to oppose Bitcoin openly, we have seen some interesting shifts take place already. One of the best examples is JPMorgan, which may soon offer Bitcoin futures products to its clients. That decision comes less than two months after its CEO called Bitcoin a fraud. It is interesting how the world works these days, to say the very least.
To that end, we’re now seeing Shinhan Bank in South Korea work on a “virtual currency deposit service”. It is still unclear what this product will entail exactly and whether or not cryptocurrencies will be supported. It is evident the bank wants to get a piece of the pie when it comes to supporting new forms of money such as Bitcoin and prominent altcoins. South Korea is a very open-minded country when it comes to cryptocurrency, and the nation has become the central hub for cryptocurrency trading in recent months.
More specifically, Shinhan Bank has been awarded a contract which will allow it to build out its custodial service. The goal is to let the bank’s customers deposit virtual money and receive bank-grade security and technology. Bridging the gap between traditional finance and cryptocurrency is an option more banks should start exploring. Opposing Bitcoin and other cryptocurrencies serves no purpose, and there is no need to do so – especially not when there is enough consumer demand to warrant such hybrid services.
It will be interesting to see how this ecosystem evolves when banks try to get in on the action. Any storage service offered by a bank will most likely work similarly to exchanges. Bitcoin holders will not be in full control over their money, as they will need the bank’s permission to move funds around. That is not a situation anyone should be looking forward to whatsoever. Cryptocurrencies are designed to let consumers regain full financial control first and foremost. Services like these undermine that principle.
At the same time, one has to acknowledge novice cryptocurrency users are often at risk of exposing their wallets’ private keys. There will always be a market for custodial services in the Bitcoin industry, even though people should do their homework and properly store their digital wealth. Buying a hardware wallet to store one’s Bitcoin or altcoin balances will always work best and does not require trusting a third party like a bank.
For the time being, Shinhan Bank is in the process of building a “test server” capable of storing virtual money. There will also be mobile apps created in conjunction with this new service, and users will be given access to a dashboard containing statistics and reports. Putting your private key in the hands of a bank – regardless of how professional and legitimate it may appear – is not the answer for cryptocurrency users. In fact, it is taking three steps backward. Despite that, it will be interesting to see how this service evolves over time.
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