South Korea's financial regulators are jointly reviewing the long-standing industry practice that ties each cryptocurrency exchange to a single banking partner. The Financial Services Commission (FSC) and the Fair Trade Commission are leading the assessment, prompted by a government-commissioned study that found the model restricts competition and limits banking access for smaller exchanges.
The "one exchange–one bank" model, while not codified into law, emerged from Anti-Money Laundering (AML) and customer due diligence requirements. It mandates that exchanges secure an exclusive partnership with a domestic bank to handle fiat deposits and withdrawals. The commissioned report concluded this practice strengthens market concentration and creates significant barriers for new entrants, as dominant exchanges benefit from better liquidity and faster transaction speeds.
Researchers emphasized that applying uniform compliance rules disproportionately burdens smaller platforms with lower risks and trading volumes. A senior official involved stated, "We are reviewing if differentiated requirements can apply based on volume and risk exposure." This potential shift towards proportional regulation aims to decentralize trading activity and foster broader market participation.
The review is occurring alongside the delayed development of the Digital Asset Basic Act, whose second phase has been pushed to 2026 due to disagreements over stablecoin oversight. The proposed law would permit the issuance of won-pegged stablecoins while requiring reserve assets to be held by authorized custodians. Officials plan to integrate the findings from the banking model review into this upcoming legislative framework.
