Key Takeaways
- South Korea may abolish its “one exchange, one bank” rule for crypto exchanges, enabling more flexible banking partnerships.
- Regulatory changes are being proposed to foster competition and market growth, including the introduction of the Digital Asset Basic Act.
- This shift could improve compliance, attract foreign investment, and create job opportunities within the domestic crypto sector.
What Happened
South Korea’s regulatory authorities are considering ending the “one exchange, one bank” rule that has constrained cryptocurrency exchanges by limiting them to partnerships with only one banking institution. This non-legally binding regulation, initially implemented to address anti-money laundering (AML) concerns, has inadvertently reinforced market monopolies and reduced options for consumers. According to reported by CoinDesk, regulatory bodies are now revisiting this policy as part of broader reforms aimed at enhancing market competition and liquidity within the crypto sector.
Why It Matters
The proposed changes are part of a larger strategy known as the Digital Asset Basic Act, which is expected to be finalized by the first quarter of 2026. This initiative has garnered bipartisan support from the National Assembly, as lawmakers recognize the necessity of modernizing the regulatory framework for cryptocurrencies. Not only could these reforms enable crypto derivatives trading and allow corporate investments in cryptocurrencies, but they might also help South Korea mitigate the risk of significant capital outflows, estimated at $110 billion in 2025. For more insights on market impact, see our article on crypto regulatory frameworks.
What’s Next / Market Impact
The proposed revisions are expected to promote competition among crypto exchanges by diversifying banking partnerships, thus enabling them to innovate and optimize their services. As part of this effort, the government is also lifting restrictions surrounding corporate crypto investments, allowing companies to invest up to 5% of their equity in licensed cryptocurrencies. Legalizing crypto derivatives trading and easing ownership limits are additional measures anticipated to bolster market participation and compliance. According to Phemex, this push towards regulatory easing is expected to strengthen South Korea’s position as a competitive player in the global crypto market.
