South Korean financial authorities ease restrictions: abolish "1-to-1" limits, crypto derivatives trading is expected to be legalized

South Korean regulators are pushing forward with a systematic reform of the crypto market. According to the latest news, Korean financial authorities plan to abolish the long-standing “1 exchange to 1 bank” binding restriction, while allowing the issuance of crypto derivatives and participation of corporate accounts in trading. This reform will be incorporated into the second phase of legislation for the “Digital Asset Basic Act,” with both parties in the National Assembly reaching a consensus on easing regulations. This marks a shift in South Korea’s crypto regulatory framework from strict control to orderly openness.

Why the “1-to-1” Restriction That Has Been Bound for Ten Years Needs to Be Broken

The true face of the restriction

The “1 exchange to 1 bank” binding restriction, while not legally mandatory in name, has effectively become a rigid constraint in South Korea’s crypto market. This restriction originated from anti-money laundering compliance requirements but evolved into a market monopoly mechanism in practice—each exchange can only cooperate with one bank, leading to a lack of genuine competition among exchanges and severely limiting user choice.

This “one-to-one” binding model directly restricts market liquidity. When users are locked into a specific exchange-bank combination, they cannot freely move to other platforms. Market fragmentation is high, trading depth is insufficient, ultimately harming the healthy development of the entire ecosystem.

The core logic of the reform

South Korea’s financial authorities have a clear reform approach: break the monopoly structure and unleash market vitality. By allowing one exchange to cooperate with multiple banks, or one bank to serve multiple exchanges, the goals are to:

• Increase competition pressure among exchanges, promoting service quality improvements
• Lower user switching costs, enabling true free flow of funds
• Improve overall market liquidity, attracting more professional institutional participation
• Provide infrastructure support for derivatives markets and institutional investors

Derivatives and Corporate Accounts: The Next Growth Point of the Market

Specific implications of the two major reforms

The other two key aspects of this reform—allowing crypto derivatives issuance and corporate account trading—are equally significant.

The derivatives market has always been an important component of traditional finance but has been strictly restricted in South Korea’s crypto market. Allowing derivatives issuance means exchanges can launch complex products like futures and options, which can meet the hedging needs of professional investors and attract institutional capital.

The opening of corporate accounts is even more critical. Previously, South Korean crypto trading was mainly targeted at individual investors, with limited participation from enterprises and institutions. Once corporate accounts are permitted, funds from listed companies, funds, and corporate entities can legally enter the crypto market, fundamentally changing the market’s capital structure.

Alignment with Global Trends

These reforms are highly consistent with the development direction of the global crypto market. The US has approved spot Bitcoin ETFs and Ethereum ETFs, opening the door for institutional investors. The EU is refining the MiCA regulatory framework, establishing clear rules for derivatives markets. South Korea’s reform is essentially catching up with the modernization of global regulation.

From related information, South Korea has previously relaxed restrictions on listed companies investing in crypto assets. This reform can be seen as a natural continuation of that policy—progressing from “can invest” to “can fully participate.”

Will the Reform Be Successfully Implemented?

The importance of political consensus

The fact that this reform has gained support from both parties in the National Assembly is rare in South Korean politics. It indicates that the reform is not just driven unilaterally by a certain department but has a broader political foundation. Incorporating it into the second phase of the “Digital Asset Basic Act” legislation shows that the reform will go through formal legal procedures, ensuring its long-term validity.

Possible challenges

Although the direction is clear, several obstacles remain for actual implementation:

• Balancing anti-money laundering and compliance requirements: After removing the “1-to-1” restriction, how to ensure financial security and AML compliance will require new regulatory frameworks
• Cooperation from banking systems: Are commercial banks willing to work with multiple exchanges? This involves cost and risk assessments
• Risk management in derivatives markets: After allowing derivatives issuance, how to prevent market risks and excessive leverage will require supporting risk management systems

Potential Impact on the Market

If the reform proceeds smoothly, South Korea’s crypto market may experience several major changes:

First, increased competition among exchanges will lead to lower fees and service upgrades. Users will benefit from more favorable trading rates and a richer product selection.

Second, large-scale institutional capital inflows will alter the market structure. The opening of corporate accounts means the crypto market will no longer be just a playground for retail investors but will formally become part of institutional portfolios.

Third, South Korea is expected to become an important center for Asian crypto derivatives. Compared to Singapore and Hong Kong, South Korea’s policy support is rising, which could attract more derivatives platforms and professional trading institutions.

Summary

South Korea’s financial authorities’ reform marks an important turning point. Moving from “regulation” to “openness,” from “personal market” to “institutional market,” South Korea’s crypto industry is upgrading from the fringe to the mainstream. Although specific implementation details still depend on subsequent legislation, the political consensus has laid a solid foundation for the reform.

For the entire Asian crypto market, South Korea’s move could set an example. If successful, other countries and regions may follow this model to advance their own regulatory modernization. For crypto industry participants, it is crucial to closely monitor the progress of the second phase of the “Digital Asset Basic Act” legislation and the specific regulatory rules accompanying it.