The Korean cryptocurrency market is booming, with over 16 million citizens (over 30% of the population) holding crypto exchange accounts up to now.
With this huge user base, the country's top traditional banks have pushed lawmakers for regulatory changes that block fair competition now and limit innovation in the digital asset sector, according to a report from today's local news outlet money.
Why are major Korean banks pushing for changes to rules?
At a high-level meeting held this week, executives from the country's largest financial institutions, KB Kookmin, Shinhan, Hana, Woori, NH Longhyup, Jeonbuk Bank and Internet-only Toss Banks, have removed lawmakers from the ruling power party in order to revive the rules of a one-on-one partnership between Banks and Cryptoanges.
President Jung Jin-Wan of Woori Bank, citing consumer restrictions and institutional demand, argued that local exchanges should be allowed to partner with multiple banks.
How does the current law create “uneven playing fields”?
Under current law, each Korean crypto exchange must partner exclusively with one bank to provide crypto services from Fiat, a regulation aimed at preventing money laundering and ensuring actual verification.
Critics are effective in implementing accountability, but critics argue that it created an uneven playing field, allowing some banks to enjoy large user growth while others are excluded.
Related: Research: Almost 50% of South Korean investors hope that US tariffs will harm the crypto market and drive price drops
The main example cited is K-Bank. Neobank, which partnered with Top Exchange Upbit in 2020, has surged its user base from 219 million to 6.6 million over the course of a year. As of the second half of 2024, that number almost doubled to 12.7 million.
The growth of this feature, enabled by regulatory exclusiveity, has made the current framework a controversial issue among major South Korean bankers.
How large is the Korean crypto user base?
Data obtained by opposition lawmaker Cha Gyu-Geun and reported by Yonhap reveals that South Korea's crypto user base has exceeded 16 million after winning the election for US President Donald Trump last November.
That number represents almost a third of the country's population, with total holdings exceeding 102.6 trillion won ($70.3 billion). Analysts predict that this figure could reach 20 million people by the end of the year despite concerns about market saturation.
Related: Google Play Store Boots Unregistered Exchange in Korea
Meanwhile, a recent report from the country's ethics committee for government officials revealed that over 20% of the top civil servants own crypto assets, each holding an average of 35.1 million wins ($24,000).
The disclosure, which continues to have 14.4 billion wins ($9.8 million) across 411 individuals, includes holdings of mainstream tokens such as Bitcoin, Ethereum, XRP, Dogecoin and Lunk.
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