Banks Hope Rule Changes Will Boost Crypto Exchange Deposits

Banks are increasingly hopeful that regulators will ease rules preventing crypto exchanges from working with multiple banking partners. Currently, each exchange is limited to one bank for deposits and withdrawals, a system that has concentrated funds among a few major players.

In South Korea, the market is dominated by Upbit and Bithumb, which together control nearly 97% of trading activity. As a result, their partner banks hold the bulk of crypto-related deposits, while smaller exchanges and banks struggle to attract funds.

Industry officials argue that a multi-bank model would reduce concentration and allow smaller exchanges to compete more fairly. It could also help banks grow demand deposits and reach new customers.

The single-bank rule was originally introduced to improve transparency and reduce money laundering risks. While the framework has remained unchanged for years, renewed discussions suggest policymakers may reconsider. Any shift could reshape relationships between banks and crypto platforms in the region.

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