Key Reforms Expected Later This Year
South Korea’s financial authorities are accelerating plans to overhaul the country’s digital asset regulatory framework, with reforms expected to be announced later this year as policymakers seek to revive trading activity and strengthen competition in the domestic crypto market.
According to a report by Herald Economy, regulators are considering measures that would ease long-standing restrictions, including reforming the so-called “one exchange, one bank” practice and allowing the issuance of digital asset derivatives.
The discussions are being led by the Financial Services Commission (FSC) and the Fair Trade Commission, which are coordinating short, medium, and long-term regulatory changes.
A government official cited in the report said relevant ministries are working to finalize the scope and timing of the reforms, with the aim of unveiling concrete measures within the year.
Research Findings Drive Regulatory Considerations
The effort builds on a recent research project titled “Virtual Asset Trading Market Analysis and Competitive Impact Assessment of Key Regulations,” conducted by Dongguk University’s Industry-Academic Cooperation Foundation.
One of the central recommendations is scrapping the de facto one-to-one pairing between crypto exchanges and banks. While not explicitly mandated by law, the practice has been widely adopted for anti-money-laundering and customer due diligence purposes.
Critics argue that it has limited competition and imposed uniform standards on exchanges with vastly different risk profiles and trading volumes.
The research also highlights digital asset derivatives as a potential catalyst for change. Introducing derivatives could shift the market away from its current spot-heavy structure, improve liquidity, and reshape competition among exchanges.
Allowing corporate participation in crypto trading was also proposed as a way to attract institutional capital and narrow liquidity gaps.
The findings note that South Korea’s won-based crypto market remains highly concentrated around two dominant exchanges, with regulations limiting asset variety and market participants, reducing the benefits typically associated with economies of scale.
Legislative Efforts and Political Discussions
Lawmakers are now moving to integrate digital assets more fully into the institutional framework through the second phase of the Digital Asset Basic Act.
Both the ruling People Power Party and the opposition Democratic Party of Korea are holding policy discussions, though disagreements remain, particularly over whether to cap major shareholders’ stakes in exchanges.
While foreign exchange entry has been excluded from initial talks, officials say the reforms aim to balance innovation, competition, and investor protection as South Korea recalibrates its approach to digital assets.