South Korea reviews ‘one exchange–one bank’ practice, may ease banking access for crypto platforms
South Korea’s Financial Services Commission (FSC) and Fair Trade Commission are reviewing the informal “one exchange–one bank” practice in which each crypto exchange relies on a single domestic bank for Korean-won deposits and withdrawals. The model evolved from AML/KYC compliance pressures rather than statutory requirement. A government-commissioned study cited by local media found the arrangement entrenches large incumbents, raises entry barriers for smaller or new exchanges, concentrates won trading volume on a few platforms, and may distort competition. Regulators are examining whether applying identical compliance burdens to all exchanges is fair given differing risk profiles and whether banking arrangements unfairly limit competition and innovation. The review comes alongside other regulatory moves: the FSC recently allowed listed firms and investment companies to hold up to 5% equity in the top 20 cryptocurrencies, and the Digital Asset Basic Act — which would permit won-backed stablecoins under strict custody and supervision — has been delayed until 2026. Traders should watch for policy changes that could expand banking access and on-ramps, reduce fee and liquidity advantages enjoyed by incumbents, shift domestic order flow between platforms, and influence fiat liquidity and spreads on Korean-won pairs.
Neutral
The review of the ‘one exchange–one bank’ practice is primarily a structural and competition-focused regulatory development rather than a direct policy that targets specific cryptocurrencies. Short-term market impact on major crypto prices is likely muted because the change affects exchange-level fiat on-ramps and market structure rather than token fundamentals. If regulators ease banking access, the long-term effects could be more substantive: increased competition may lower trading fees and concentrate less fiat volume on incumbents, improving fiat liquidity and on-ramp options for traders — a constructive outcome for market efficiency. Conversely, the delay to stablecoin legislation (Digital Asset Basic Act) reduces near-term prospects for won-backed stablecoins, limiting potential local fiat-stablecoin liquidity innovations. Overall, the net near-term price effect on listed cryptocurrencies is likely neutral; however, improved banking access in the medium term could marginally benefit trading volumes and liquidity, which is mildly bullish for local market activity but not directly bullish for specific crypto prices.