South Korea debates ending one-bank exchange rule

TLDR

South Korea is considering scrapping the rule that forces each crypto exchange to work with only one bank for real-name accounts, which could reshape its trading infrastructure.

1. Lawmakers are debating an amendment that would let exchanges secure verified deposit and withdrawal accounts from multiple banks instead of a single partner.
2. Ending the rule could boost competition, improve access for smaller exchanges, and potentially reduce fees and service disruptions for Korean crypto users.
3. The move fits into a broader tightening-yet-normalizing regulatory framework, including new user protection rules and a proposed Basic Digital Asset Act.

Deep Dive

1. What The Rule Is And The Proposed Change

Since 2018, South Korean crypto exchanges have been required to partner with exactly one bank to provide real-name verified deposit and withdrawal accounts, a key anti-money-laundering safeguard.

A bill before the National Policy Committee would amend the Act on Reporting and Use of Certain Financial Transaction Information to allow virtual asset service providers to obtain such accounts from multiple financial institutions, with specific standards and procedures later set by presidential decree.

This debate is confirmed in a National Assembly-facing explainer that notes the rules origin as a transparency measure and its current status as one of 136 bills on the legislative agenda, including the proposal to remove the one exchange-one bank restriction.

2. How It Could Change The Market

Exchanges argue the one-bank rule limits their ability to scale and negotiate terms, concentrating bargaining power in a few banks and reinforcing the dominance of top platforms like Upbit and Bithumb.

Allowing multiple banking partners could:

1. Increase competition among banks to serve exchanges, pressuring fees and improving service quality.
2. Make it easier for smaller exchanges to secure robust banking, lowering entry barriers and enhancing resilience if one bank exits.
3. Reduce operational risk for users by diversifying banking rails and potentially smoothing deposit/withdrawal access during stress events.

Industry observers caution that more bank relationships mean more complex anti-money-laundering oversight, so detailed guidance from the Financial Services Commission would be essential to avoid fragmented compliance.

3. Place In Koreas Regulatory Trajectory

The debate comes alongside broader efforts to systematize digital asset regulation, including the Virtual Asset User Protection Act, which tightened custody and insurance requirements, and a planned Basic Digital Asset Act with a proposed 20 percent ownership cap for major exchange shareholders.

Lawmakers are also pushing for clearer frameworks on stablecoins, surveillance, and tax timing, signaling a shift from ad hoc rules toward a more comprehensive, bank-integrated digital asset regime.

For global markets, South Koreas decisions matter because its won-denominated trading is significant; a more open bank-exchange model could reinforce its role as a major liquidity hub while keeping strong compliance expectations.

Conclusion

South Koreas discussion about ending the one-bank exchange rule is less about loosening controls and more about modernizing how banks and exchanges interact under tight oversight.

If lawmakers approve the change and regulators implement clear conditions, Korean users could see more resilient, competitive on- and off-ramps, while exchanges face a more complex but potentially fairer banking landscape.