NH Nonghyup Bank Sets Up Consortium to Make Foray into Virtual Asset Custody Market
Will break new ground in business to make good use of virtual assets by banding together with law firm BKL and Hexlant
NH Nonghyup Bank holds a ceremony to sign a business agreement to cope with the Act on Reporting and Use of Specific Financial Transaction Information related to Virtual Asset Operators with law firm BKL and Hexlant at NH Digital Innovation Campus of NongHyup Bank in Seocho-gu on June 9. From left are Oh Yang-ho, a lawyer representing BKL, Jang Seung-hyun, a senior vice president of NH Nonghyup Bank, and Noh Jin-woo, CEO of Hexland. (Photo: NH Nonghyup Bank)
NH Nonghyup Bank will expand its digital financial business through a virtual asset custody project.
Ahead of the enactment of the Act on Reporting and Use of Specific Financial Transaction Information related to Virtual Asset Operators in March 2021, the bank set up a joint consortium with law firm BKL and blockchain technology company Hexlant.
They agreed to abide by related laws including the Act on Reporting and Use of Specific Financial Transaction Information related to Virtual Asset Operators and its enforcement decree, while also creating a business model (BM) related to virtual assets.
NH Nonghyup Bank announced on June 10 that it will form a consortium with law firm BKL and blockchain solution developer Hexlant to jointly respond to the act.
The law firm BKL will be responsible for legal and policy advice on various projects, including exchanges, custodians, remittance, and funds based on blockchains and virtual assets as well as anti-money laundering (AML) in the act.
Hexlant which works at TIPS, a private-led technology start-up support program run by the Ministry of SMEs and Startups will be in charge of the verification of system security for operators such as virtual asset exchanges and blockchain infrastructure services.
In this regard, those in the blockchain and virtual asset industry predict that NH Nonghyup Bank, which has solid financial consumers and infrastructure, will expand its digital financial business by acting as an asset manager or custodian for virtual assets based on the act that will incorporate virtual assets into the financial system.
In addition, NH Nonghyup Bank provides real-name verification accounts to Bithumb and Coinone among the nation's large virtual asset exchanges.
“Based on our previous experience in providing financial services and the results of this consortium’s research, we will build a virtual asset platform using blockchain technology,” an NH Nonghyup Bank official said. “Through this, we will provide an environment where virtual asset operators and general customers can safely utilize virtual assets.”
NH Nonghyup Bank, which is making efforts on security, said it has selected 32 tasks in the security sector by 2022, and plans to complete nine of them this year.
Among the security tasks that NH Nonghyup Bank will focus on in 2020, one of the most notable is the establishment of the Security Orchestration, Automation, and Response (SOAR) System. NH Nonghyup Bank is discussing the system with the aim of completing it by 2022.
In particular, NH NongHyup Bank plans to increase the scope of its defense against security threats as much as possible by drastically expanding the scope of targets for analysis of infringement threats not only to internal systems but to external systems and fintech-related areas.
This also sits well with financial authorities' response to "digital risks" that they are emphasizing in financial security policies this year.
Currently, NH NongHyup Bank is working with many fintech companies to develop various innovative financial services through Open API designed to reduce security threats by managing even data provided through Open API within the framework of general control.
SOAR is a concept presented by Gartner in 2017 that automatically classifies the level of response to cyber threats during the operation of security systems. It is also a platform that supports people and machines to cooperate organically in accordance with standardized work processes to increase their responsiveness. In other words, the SOAR System intends to achieve the highest level of "security system automation."
However, NH NongHyup Bank believes that the technical concept of SOAR has yet to be fully established in the market, so plans to focus on reviewing, analyzing, and consulting SOAR this year. Accordingly, the full-fledged selection of operators is expected to begin in 2021.
In fact, there are no security companies in Korea that can present SOAR solutions except for some companies such as Ahn Lab.
At the same time, the second phase of the project will be carried out in earnest in 2020 for the Endpoint Detection & Response (EDR) Project which has been promoted by NH Nonghyup Bank since 2019.
NH NongHyup Bank previously carried out the first phase of a pilot EDR project for about 4,000 terminals at branches last year, and plans to finally complete the EDR Project through the third stage in 2021.