Metaverse riches lure one of S. Korea's oldest conglomerates

SEOUL • One of South Korea's biggest conglomerates with roots in traditional industries is taking a leap into the unknown with its next growth target: the metaverse.

SK Square, the investment arm of the massive SK Group spun off into its own stock last month, wants every portfolio company to have a metaverse presence, managing director Huh Seok-joon, 48, said in an interview.

Customers should be able to use cryptocurrencies for shopping, streaming media and other transactions with the metaverse community, he said.

Corporations the world over are laying bets on the metaverse, an envisioned virtual environment where people can interact with the Internet and others, supplanting Web browsers and mobile apps.

SK Square is moving swiftly to avoid falling behind younger, nimbler competitors: It bought a 35 per cent stake in a crypto exchange last month and one of its affiliates is planning to issue a coin in the first half of next year, Mr Huh said.

"Our business needs to evolve into the metaverse," Mr Huh said. "Our new interface between customers will be shifting from mobile phones to metaverse and coins will be used as new currencies on our platforms."

SK Square is entering an already-crowded field that has drawn the likes of Facebook parent Meta Platforms and domestic rivals Naver and Kakao. But these investments will likely take years to pay off, if at all, given the tech and software required to realise their vision of the metaverse remain nascent.

Such radical bets are rare among family-controlled conglomerates, known as chaebol in South Korea, that have been dependent on manufacturing sectors for decades.

Seoul-based SK Square, split off from SK Telecom, is following a SoftBank Group model for investments in future technologies. On its first day of trading last week, SK Square announced a 90 billion won (S$104 million) investment in Korbit, South Korea's fourth-largest crypto exchange.

Although Korbit's share of the South Korean market is only about 0.3 per cent, SK Square saw it as a good way to enter the crypto business at a cheap valuation. Dunamu, parent of South Korea's leading crypto exchange firm Upbit, is valued at about 17.8 trillion won, according to Seoul Exchange, an unlisted trading platform.

SK Square aims to list coins on Korbit that can be used for buying products and services from SK Group companies, starting with one coin, Mr Huh said. SK Square is the largest shareholder of chip giant SK Hynix and its other portfolio companies include app market firm One Store, online shopping mall 11street and ride services provider Tmap Mobility.

SK will eventually issue a coin for SK Telecom-run metaverse platform called "ifland", Mr Huh said.

SK Square's investment comes as South Korea is tightening rules on crypto activities and outlining laws related to investor protection and penalties on illegal acts. The country has shut down dozens of cryptocurrency exchanges and approved just a few major exchanges, including Korbit, that require users to register with real names and bank accounts for trading.

Yet SK Square is forging ahead. It is considering investing in foreign crypto exchange firms with a vision of setting up an international coin ecosystem, Mr Huh said. It may also look at buying cryptocurrencies, including Bitcoin, if local restrictions on direct investments in crypto assets are lifted, he said.

"I don't think cryptocurrency itself is a speculative asset," he said. "We are aware of the volatility of the price move and need to be careful. But it doesn't make sense for us to rule out crypto as an investment option."

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