Crypto: South Korea Weighs Ending One-bank Rule For Crypto Exchanges: Report

South Korea is reportedly reviewing exclusive bank partnerships for crypto exchanges as regulators assess competition and prepare the Digital Asset Basic Act.

South Korea’s financial regulators are reviewing a long-standing practice that effectively ties each cryptocurrency exchange to a single banking partner, as part of a broader examination of competition in the country’s crypto market, according to local media.

Business media outlet the Herald Economy, citing government officials familiar with inter-agency discussions, said a review effort is being coordinated between the Financial Services Commission (FSC) and the Fair Trade Commission as policymakers evaluate whether existing practices contribute to market concentration.

Although the “one exchange–one bank” model is not explicitly codified in South Korean laws, it emerged in practice due to Anti-Money Laundering (AML) and customer due diligence requirements.

As a result, crypto exchanges have typically relied on exclusive partnerships with domestic banks to provide fiat on- and off-ramps for customers.

The policy discussions reportedly follow a government-commissioned research project that analyzes the virtual asset trading market and the competitive impact of key regulations in South Korea.

The study examined the structure of the crypto market and assessed how existing regulations may affect competition among domestic exchanges.

The report, obtained by the Herald Economy, concluded that the exchange-bank pairing model may reinforce market concentration by limiting banking access for newer or smaller exchanges.

While the model aims to manage compliance risk, the study found that applying uniform standards to exchanges with different risk profiles and volumes may be disproportionate.

The researchers highlighted that the Korean won-based crypto market remains highly concentrated around a small number of large platforms.

Source: CoinTelegraph