Recently, news emerged that financial authorities will open corporate real-name accounts for virtual assets, sparking optimism within the custody industry, which is responsible for holding and managing virtual assets. While the custody business is already thriving abroad, it has been virtually impossible to provide services in South Korea due to a lack of guidelines and the prohibition of corporate accounts.
According to the 'Latest status of virtual asset service provider (VASP) reporting' material published on the Financial Supervisory Service (FSS) website on the 19th, among the 27 exchanges, 13 have officially terminated services, and 7 have been identified as 'ghost exchanges' with zero transactions over the past week, excluding the newly approved exchange 'Dolphin.'
In contrast, among the 12 specialized virtual asset custody service providers, only 3 have ended services. Of these, two new firms, DSRV Labs and Bidex, completed the registration process as service providers in September this year. The domestic virtual asset industry anticipates growth in the custody market if corporate real-name accounts are permitted.
Virtual asset custodial services involve holding and managing customers' digital assets for a fee, similar to traditional banking services. When investors hold virtual assets directly, there is a risk of losing or having the virtual asset wallet security key (Private Key) stolen, creating a need for secure custody. Abroad, major investment banks such as Goldman Sachs and specialized custodial firms provide custodial services.
The demand for custody services primarily comes from corporate investors looking to manage large amounts of virtual assets. Currently, corporations cannot convert virtual assets like Bitcoin into Korean won due to restrictions on corporate real-name accounts. As a result, custody firms are struggling to achieve significant performance, waiting for financial authorities to allow corporate accounts.
Earlier, global custody firms such as Bitgo, based in California, and Fireblocks, based in New York, indicated plans to enter the Korean market in collaboration with domestic financial institutions, but progress has yet to materialize. According to Business Insight Research, the size of the virtual asset custody market was approximately $553.1 billion (763 trillion won) last year, growing at an average annual rate of 23.65%, projected to reach $3.742 trillion (about 515.8 trillion won) by 2032.
However, with recent news that the Financial Services Commission is internally developing guidelines for corporate accounts and consulting with the Financial Supervisory Service, custody service providers are hopeful that a new market will open as early as this year. Jo Jin-seok, CEO of the first domestic custody firm, Korea Digital Asset (KODA), established by KB Kookmin Bank, Hashed, and Hatch Labs, stated, "With expectations for market revitalization following the news of corporate account approval, KODA is preparing to establish partnerships with exchanges for future operations, but it is regrettable that the approval for profit-making companies is delayed due to a phased approach."
Kim Dong-hyuk, a researcher at the Web3 consulting firm Dispread Research Team, noted, "If corporate accounts are permitted and institutions that primarily conduct large-scale transactions enter the market, both custody firms and exchanges can expect additional revenue. However, because custody firms are limited to potential profits from service fees, compared to exchanges that can anticipate benefits from trading fees, new service fees for institutions, increased exchange trust, and liquidity, exchanges are likely to gain more advantages from corporate account approvals."