Regulators in South Korea are conducting a review of the exclusive partnerships between banks and cryptocurrency exchanges, citing concerns about potential competition issues within the digital asset market. This evaluation is being carried out by the Financial Services Commission (FSC) in collaboration with the Fair Trade Commission.
The assessment coincides with delays in the legislative process for stablecoins under the proposed Digital Asset Basic Act. A recent government study indicates that the current model, which typically links a single exchange to one banking partner, could be reinforcing the dominance of major crypto platforms while disadvantaging smaller or emerging exchanges.
According to local media reports, the “one exchange–one bank” structure, though not formalized in law, has become a common practice as banks strive to meet stringent anti-money laundering (AML) and customer verification requirements. This arrangement has led to many crypto platforms relying on exclusive banking relationships to facilitate won-denominated deposits and withdrawals.
The government-commissioned study highlights risks associated with market concentration. Researchers found that uniform compliance standards imposed on exchanges with varying risk profiles and trading volumes could create unfair burdens for smaller operators. Consequently, the study pointed out that South Korea”s won-based cryptocurrency market remains heavily concentrated, favoring liquidity and transaction efficiency for larger exchanges.
This regulatory review is particularly significant as South Korea aims to advance its crypto regulatory framework through the Digital Asset Basic Act, which has encountered delays, with lawmakers postponing the bill”s submission until 2026. The proposed legislation, backed by President Lee Jae-myung, aims to regulate the issuance of won-pegged stablecoins and mandates that issuers maintain reserve assets with approved custodians.
Key discussions revolve around whether a dedicated authority should be tasked with pre-approving stablecoin issuers. The FSC is exploring ways to implement oversight while ensuring that non-financial technology firms can also participate in the market.
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