South Korea’s financial regulators have launched a deep review of the long-standing practice that ties each cryptocurrency exchange to a single banking partner. This measure, unofficially known as the one-bank rule, is being analyzed by the Financial Services Commission (FSC) to determine its impact on free market competition.
The announcement, coordinated between the FSC and the Fair Trade Commission, follows the detection of excessive concentration in the local digital asset market today. Although the regulation is not formally written into the laws, the practice was consolidated due to strict anti-money laundering and due diligence requirements enforced in the past. Therefore, exchanges have operated under exclusivity schemes that limit deposit and withdrawal options for South Korean users.
The fact is that a recent study commissioned by the government warns that this model reinforces the dominance of the largest trading platforms over new competitors. The report highlights that applying uniform standards to entities with different risk profiles is disproportionate for the current ecosystem. Thus, transaction efficiency tends to favor dominant players, hindering the entry of innovative companies into the sector in an unfair manner.
Modernizing the legal framework through the Digital Asset Basic Act
This regulatory review coincides with preparations for the second phase of South Korea’s crypto legislation, commonly called the Digital Asset Basic Act. The regulation seeks to establish a supervision framework for stablecoins linked to the Korean won and other modern financial instruments. Likewise, the government has integrated these reforms into its Economic Growth Strategy for the year 2026, positioning digital assets as part of the formal system.
On the other hand, the proposal backed by President Lee Jae-myung contemplates allowing technology companies to issue their own regulated digital assets. However, the debate over the supervision of reserves has delayed the final implementation of the law until the coming months. As lawmakers resolve these discrepancies, the industry expects a flexibilization that allows multiple banking partners per platform to boost the domestic market.
Will the new regulations successfully balance investor protection with technological innovation?
Despite the challenges, the transition to a multi-channel model could significantly reduce entry barriers for small operators in the country. Treating large exchanges as traditional financial institutions will force platforms to improve their IT security and compliance standards. While authorities evaluate these changes, the private sector pushes to avoid excessive regulations that could slow down growth of the organic market.
Finally, the success of these reforms will depend on the regulators’ ability to harmonize competition with national financial stability. Ending the one-bank rule is expected to foster greater liquidity and service options for more than eleven million users. Therefore, the South Korean market is moving toward a structural maturity that will define its competitive position in the global digital economy during the next biennium.
