Crypto Market Update: South Korean Banks Joined with Lawmakers to Ease Crypto Exchanges

South Korea’s top banking leaders recently sat down with lawmakers to push for more flexible rules around working with cryptocurrency exchanges. The goal? To open up the space for better partnerships and safer, more accessible services for users. The current system, while focused on anti-money laundering (AML), has its limitations, and bankers believe it’s time for a change.

Why Banks Want Flexibility in Crypto Partnerships

Woori Bank President Jung Jin-wan was one of the key voices in the meeting with lawmakers from the ruling People Power Party. He pointed out a significant issue: Right now, each crypto exchange can only partner with one bank. This setup, while aimed at controlling money laundering, creates a bottleneck for growth and limits options for both consumers and institutions.

Jung highlighted the risks to systemic stability and asked for a more open approach, one that allows exchanges to team up with multiple banks. His argument was simple: with broader banking options, crypto exchanges could serve users better and support a more balanced ecosystem.

The Current AML Rule: One Bank, One Exchange

According to South Korean law, crypto exchanges are allowed to provide fiat-to-crypto services if they are officially partnered with a bank. Services allow customers to deposit and withdraw cash. Customers are required to make their real-name bank accounts identifiable on the site to utilize such services.

This legislation was put in place to stop criminal transactions such as money laundering. But in confining all exchange to one bank, it also limits the choice of the user and provides an unfair playing field for the banks.

Some banks, such as K-Bank, have gained. K-Bank collaborated with Upbit in 2020, and its number of users grew from 2.19 million to 6.6 million in a single year. It had grown to 12.7 million by 2024.

Push for More Consumer and Institutional Options

Bank leaders at the meeting urged lawmakers to consider how the current rules limit individual and institutional users. Allowing multiple banks to work with a single exchange could bring more choices for customers and better access for companies looking to invest in crypto.

Jung’s message was clear: “Considering there are limitations on consumer choice and institutional clients, please expand [the regulation] to one exchange to multiple banks.” This change, he believes, would support both growth and security in the financial system.

Preparing for Institutional Investment in Crypto

South Korea is also preparing to welcome institutional investors into the crypto space. As regulators ease restrictions, exchanges and banks are getting ready to support business clients.

Upbit has already started receiving inquiries from companies interested in opening accounts. At the same time, Korbit has launched a service to help manage crypto holdings for institutions.

With retail and institutional interest growing, the call for more flexible partnerships between banks and exchanges seems more timely than ever.