Debate grows over Korea’s single-bank policy for crypto exchanges
The price of Bitcoin is displayed on a screen at a Bithumb lounge in southern Seoul, Monday. Yonhap
Woori Bank has reignited a debate as to whether Korea will lift the regulation that limits cryptocurrency exchanges to partnering with only one bank for deposit and withdrawal accounts, according to industry watchers on Friday.
Since the introduction of the real-name system for cryptocurrency trading in 2018, individuals have been required to conduct transactions on exchanges using real-name verified accounts issued by banks. This has led exchanges to establish partnerships with banks.
However, current regulations restrict each exchange to partnering with only one bank. Regulators implemented this policy to enhance transparency in fund flows and prevent money laundering.
At a meeting with lawmakers from the ruling People Power Party who oversee financial affairs Wednesday, Woori Bank CEO Jeong Jin-wan called for removing the rule.
Woori Bank CEO Jeong Jin-wan / Courtesy of Woori Bank
Rep. Kang Min-kuk, who attended the meeting, quoted Jeong as saying, "The current system, which restricts each cryptocurrency exchange to a single banking partner, raises concerns about system stability, reduces options for consumers and may impose limitations on corporate users. Allowing exchanges to collaborate with multiple banks would be a more effective approach."
Among Korea’s five cryptocurrency exchanges, top-ranked Upbit has partnered with Kbank for real-name verified accounts, while second-ranked Bithumb is partnered with KB Kookmin Bank. Coinone works with KakaoBank, Korbit with Shinhan Bank and GOPAX with Jeonbuk Bank.
Except for NH NongHyup Bank, which ended its six-year partnership with Bithumb on March 23, only Woori Bank and Hana Bank, among the country’s five major commercial banks, have yet to enter the crypto exchange business.
With cryptocurrency exchanges emerging as essential partners for banks, the pressure is mounting on Woori Bank to secure a foothold in this rapidly growing sector.
Jeong’s suggestion to adopt one exchange–multiple banks system is seen as part of the bank's efforts to forge a business tie with Upbit as the latter's partnership with Kbank is set to expire in October.
From Woori Bank’s perspective, partnering with Upbit would be the most favorable outcome. However, Kbank may renew its contract, or another competitor — possibly Hana Bank — could win the deal.
In such a case, the only viable route for Woori Bank to collaborate with Upbit would be through a system that allows cryptocurrency exchanges to work with multiple banks simultaneously.
Given that the one exchange–multiple banks model has already been adopted in the European Union and parts of Asia, Korea’s financial authorities acknowledge that the issue warrants consideration from a long-term perspective and are not ruling out the possibility of permitting multiple banking partnerships.
However, they remain cautious due to concerns over risks associated with high-value cash transactions.
"High-value cash transactions are subject to mandatory reporting, which helps authorities detect crimes such as drug trafficking," an official from the Financial Services Commission said. "If these transactions are dispersed across multiple banks, oversight could be weakened, making it more difficult to trace suspicious activity."