Korea Regulator Opposes Multiple Bank Partnerships for Crypto Exchanges

The Financial Services Commission (FSC) in South Korea has expressed concerns about allowing cryptocurrency exchanges to sign real-name account agreements with multiple banks, citing potential risks of money laundering and market concentration.

The FSC stated that the effect of multiple bank partnerships on anti-money laundering efforts has not been sufficiently verified and that any easing should be weighed only after the Digital Asset Basic Act takes effect. This law is expected to strengthen oversight by shifting entry rules for exchanges from a registration system to a licensing system.

Market participants argue that the current one-exchange-one-bank structure causes significant inconvenience for customers and restricts their freedom to choose a financial institution. Industry officials point out that no other country imposes such a restriction, and Rep. Kim Sung-won of the People Power Party has introduced a bill to amend the Act on Reporting and Using Specified Financial Transaction Information to permit one exchange to work with multiple banks.

The FSC's position is also concerned with potential concentration in the domestic won-trading market, where the two largest exchanges, Upbit and Bithumb, account for 95% of average daily trading value. Allowing multiple bank partnerships could deepen this concentration by making it easier for large exchanges to secure additional customers from several banks.