"Banks Request Permission to Enter the Virtual Asset Industry"

Banking Sector to Petition the New Government

Calls for Expansion into Non-Financial Businesses

Plans to Submit a Statement via Federation

The banking sector has decided to request that the incoming government, which will be launched after the presidential election on the 3rd, open the way for banks to enter the virtual asset industry and expand into non-financial businesses. They are also planning to demand improvements to investment advisory services and the trust system.

According to the financial industry, the Korea Federation of Banks compiled opinions at a luncheon meeting of deputy bank managers in charge of strategy at the end of last month and drafted a list of the banking sector's main proposals, including these items.

In the draft, banks pointed out that although they are helping foster a sound virtual asset market by issuing real-name deposit and withdrawal accounts, the Financial Business Act does not include virtual asset businesses within the scope of bank operations. The banking sector is reportedly planning to argue, "Banks, whose credibility, accessibility, and level of consumer protection are excellent, should be allowed to enter virtual asset-related businesses through regulatory improvements." A commercial bank official emphasized, "We want to run asset management businesses centered on custody services (digital asset management and safekeeping), but under current law, banks cannot directly operate virtual asset businesses," adding, "Bank participation is also necessary for the virtual asset ecosystem, which is now centered on trading on exchanges, to expand to custody or wallet-type models." Some interpret the request as being made with the idea of banks pushing for projects related to the issuance of KRW stablecoins in mind.

The full authorization of banks to enter non-financial businesses—a long-cherished wish of the sector—was also included among the main proposals. The banking sector has continuously pointed out that while big tech companies are attempting innovative financial and non-financial combined services thanks to more relaxed regulations, banks are essentially barred from entering other industries due to an "uneven playing field" of regulations, which raises issues of fairness.

Banks also urged the elimination of unnecessary regulations and discrimination with other business sectors to allow the free development and provision of advanced financial services. For high-quality comprehensive asset management services, banks are asking, as is done in the United States and Canada, for permission to enter investment advisory businesses or, at least, to include public funds as eligible for bank investment advisory services.

There was also indirect dissatisfaction expressed regarding how the authorities impose sanctions. The banking sector pointed out, "In the case of banking law, reasons for sanctions against financial companies (employees and executives) are regulated too broadly, making it difficult to predict which actions are sanctionable," and demanded, "Please list the reasons for sanctions specifically in connection with statutory obligations."

Reporter Mihyeon Jo mwise@hankyung.com