Major countries around the world are increasingly pursuing a 'two-track strategy' that combines regulation and promotion to respond to the digital asset industry. In contrast, South Korea is still unable to move beyond a regulation-centered perspective. In particular, opinions are being expressed that institutional reform regarding the recently emerging issue of the 'one exchange-one bank regulation' is urgent.
According to the virtual asset industry on the 27th, the political sector, ahead of the presidential election, has also brought the one exchange-one bank regulation, seen as a representative shadow regulation of the virtual asset industry, into discussion. This structure requires virtual asset exchanges to form a one-to-one partnership with a single bank to issue real-name accounts. However, this regulation has been pointed out to cause system risks and market imbalances, going against global trends.
First, as exchanges and banks establish a monopoly relationship, there may be vulnerabilities in system stability. If problems arise with the partner bank or if the contract ends, the relevant exchange will have its real-name account issuance halted, leading to operational disruptions. In fact, some small and medium exchanges have been forced out of the market or are only maintaining 'wallet services' without real-name accounts due to failures in partnerships with banks. As a result, only a few large exchanges are surviving, stifling market diversity and fair competition.
Consumers also face inconveniences and damages. Since the choice of exchange is essentially restricted by the bank with which the account is affiliated, the actual consumer choice is disappearing. From the bank's perspective, it can earn stable revenue without pressure to improve fees or services due to its monopolistic position without competition, so the quality of service inevitably declines compared to a competitive system.
The barrier to entry for new exchanges is also high. Due to strict partnership requirements and a risk-averse stance from banks, initial exchanges are struggling to secure real-name accounts, naturally solidifying a market structure dominated by large exchanges. This becomes a factor hindering vitality and innovation in South Korea's digital asset ecosystem.
In contrast, other countries are taking different approaches. The United States allows exchanges to partner with multiple banks or operate their own payment and remittance systems, placing no restrictions on the number of partner banks. Japan also does not limit the number of partnerships with banks as long as exchanges comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) standards. The European Union (EU) similarly demands transparency and internal controls based on the Anti-Money Laundering Directive (AMLD), but it does not restrict the number of partner banks for exchanges.
Moreover, improvements are also needed regarding barriers to access for foreign investors. Currently, South Korea has virtually banned non-residents from opening domestic virtual asset trading accounts since the 2017 'emergency measures regarding virtual currencies.' This is not a legal measure but merely an administrative guideline; however, it continues to operate effectively, fundamentally blocking foreign entry into the market.
This closed structure not only blocks foreign investors but also leads to distortions in the domestic digital asset market. A representative side effect is the 'Kimchi Premium' phenomenon. Even with high domestic demand, due to limited supply, transactions are taking place at prices higher than the global market rate. This increases the volatility of market prices and disrupts healthy trading order.
Furthermore, the blockage of foreign investment inflow also results in the loss of opportunities for foreign currency inflow and the potential to expand tax revenue. Given the characteristics of the digital asset market, which allows for borderless transactions anytime, anywhere over the internet, allowing foreigners to trade digital assets using domestic exchanges could generate various forms of national wealth through commission revenue, value-added taxes, corporate taxes, and so on.
Major countries abroad already permit foreign transactions without restrictions. Global exchanges like Coinbase and Kraken in the United States, and Bitflyer in Japan, provide services to foreigners as long as they comply with their respective KYC and AML procedures. This is interpreted as a proactive measure to recognize the global nature of digital assets and secure market competitiveness.
Experts believe that a gradual allowance for foreign investors is necessary even in South Korea. For instance, they suggest allowing domestic foreign residents (approximately 2.46 million as of 2023) to open real-name accounts and trade first, and then expanding gradually to non-residents. They explain that this could maintain market stability while simultaneously achieving inflow of foreign currency and expanded tax revenue.