South Korean crypto exchange deregulation proposals are causing a stir in the nation’s banking industry, with reports suggesting that major players like K Bank could be significantly impacted. The Financial Post in South Korea recently reported that the Democratic Party, the largest party in the National Assembly, is contemplating a manifesto promise to eliminate existing fiat on/off banking regulations for crypto exchanges.
Currently, domestic fiat-trading crypto exchanges in South Korea are required to partner with a bank that provides customer banking services through dedicated crypto wallet-linked bank accounts. However, the ruling People Power Party (PPP) announced in late April a series of crypto-related promises, including plans to abolish this rule. If the Democratic Party follows suit, exchanges could potentially form partnerships with multiple banks instead of being limited to exclusive deals.
This potential shift in regulations could spell trouble for K Bank, which has seen substantial growth as a result of its partnership with the leading exchange Upbit. The banking sector is now facing pressure to deregulate, with calls for change growing louder in the lead-up to the presidential election.
The media outlet also highlighted that the campaign team of Democratic Party candidate and frontrunner Lee Jae-myung is considering a similar pledge to deregulate the crypto exchange industry. This move could have a direct impact on K Bank, which has been Upbit’s exclusive banking partner since 2020.
South Korea is gearing up for a presidential election on June 3 following the impeachment of President Yoon Suk-yeol earlier this year. Lee Jae-myung is currently leading in polls by a significant margin. In response to the PPP’s efforts to attract younger voters with crypto-friendly policies, the Democratic Party has launched a Digital Asset Committee headed by pro-industry lawmaker Min Byoung-dug.
Regulators are also signaling a potential shift in their stance on the crypto sector, with the Financial Services Commission (FSC) reportedly exploring conditional deregulation measures. FSC Chairman Kim Byung-hwan emphasized the need to assess banks and exchanges’ risk management systems before deciding on regulatory changes.
Overall, the proposed deregulation of South Korean crypto exchanges is set to shake up the banking sector, with potential implications for players like K Bank. As the industry awaits further developments, the landscape of crypto trading in South Korea could undergo significant changes in the near future.