South Korea debates scrapping one-bank exchange rule

TLDR

South Korea is considering ending its rule that forces each crypto exchange to work with only one partner bank for real-name accounts.

1. Lawmakers are debating an amendment that would let exchanges open verified deposit and withdrawal accounts with multiple banks, replacing the current one-exchange-one-bank rule.
2. Scrapping the rule could increase competition among banks, improve access for smaller exchanges, and potentially lower fees for Korean crypto users, but it may add compliance complexity.
3. The debate sits alongside broader digital asset laws on exchange ownership caps and stablecoins, so the outcome will signal how far Korea wants to open its crypto market to traditional finance.

Deep Dive

1. What The Rule Change Is

Since 2018, Korean virtual asset exchanges have been required to partner with a single bank to provide real-name verified accounts, a key anti-money laundering measure. The National Policy Committee is now debating a bill to remove this one exchange-one bank requirement and amend the Act on Reporting and Use of Certain Financial Transaction Information, letting exchanges obtain real-name accounts from multiple financial institutions instead, with detailed standards set later by presidential decree, as reported in a recent legislative summary. The proposal is still at committee stage among more than 100 bills, so it is not yet law and could be revised before any vote.

2. Impact On Exchanges, Banks, And Users

Large platforms like Upbit already dominate institutional and foreign trading, with more than 60 percent of corporate crypto assets concentrated there, according to supervisory data highlighted by Korean media. Under the current rule, banks effectively choose a small number of preferred exchanges, leaving smaller venues with limited options and weaker bargaining power. Allowing exchanges to work with multiple banks could:

1. Increase competition for exchange banking relationships, encouraging better pricing and service.
2. Make it easier for smaller or newer exchanges to secure banking, reducing a structural entry barrier.
3. Give users more choice over which bank they link to their exchange accounts, potentially improving convenience and spreading risk.

At the same time, banks and regulators would need to manage more complex know-your-customer and anti-money laundering obligations across multiple exchange relationships.

3. Part Of A Wider Regulatory Shift

The one-bank debate is not happening in isolation. Korea has already adopted the Virtual Asset User Protection Act with stricter custody and insurance rules, and the Financial Services Commission is preparing a Basic Digital Asset Act featuring a 20 percent ownership cap for major shareholders of exchanges, aimed at limiting concentrated control. Lawmakers are also pushing for a standalone digital asset basic law to cover stablecoins and governance more comprehensively. Together, these moves show regulators trying to move from blunt access controls to more nuanced, rules-based oversight that still emphasizes investor protection.

Conclusion

South Koreas discussion about scrapping the one-bank exchange rule signals a potential shift from tightly constrained banking access toward a more competitive, multi-bank model for crypto platforms. For users and exchanges, the change could open up better services and lower costs, but only within a framework of tighter governance and ownership rules. Watching how the committee handles this amendment, and how it aligns with the broader digital asset bills, will be key to understanding Koreas next phase of crypto market structure.