Upbit, a cryptocurrency platform from South Korea, does most of the trading there—more than 80%! And it’s one of the top five busiest exchanges globally.
A report from Bloomberg said that last year, almost one out of every five dollars deposited by big banks came from people using Upbit.
South Korea’s Crypto Market: Upbit’s Dominance and Concerns
Upbit’s dominance has sparked criticism and concerns, especially as South Korea gears up to introduce new laws aimed at safeguarding investors in the wake of the TerraUSD stablecoin collapse in 2022.
The upcoming regulations, slated to take effect in July under the Virtual Asset User Protection Act, will impose stringent requirements on crypto exchanges. These measures include increasing reserves, bolstering investor protection, and closely monitoring suspicious transactions.
People are worried that these new rules might make Upbit even stronger in the Korean market.
Nam HyeonJoon, who speaks for Bithumb, the second-biggest trading platform in Korea, says it’s going to be tough for them to follow all the new rules. It takes a lot of money and people to make sure they do everything right.
Simon Seojoon Kim, who runs Hashed, a venture capital firm in Korea, agrees. He thinks big exchanges like Upbit will find it easier to follow the new rules because they have more resources. This might make it harder for smaller exchanges to compete.
These new rules are also affecting exchanges from other countries that want to enter the Korean market. Crypto.com from Singapore says they’re delaying their launch in South Korea because they need to talk more with regulators.
Reports of regulatory scrutiny prompted the decision, raising concerns about anti-money laundering practices.
Since the enactment of the crypto law last June, smaller exchanges such as Huobi Korea, Cashierest, and Coinbit have closed down.
Analyst Min Seung Kim from Korbit Research anticipates that Upbit will easily comply with the new regulations, noting that competition is increasingly centered around the top exchange.
South Korea’s Crypto : Upbit Leads the Way
Even with all the rules, South Korea still loves crypto. More than six million Koreans—over 10% of the population—are actively trading cryptocurrencies. Plus, the won is becoming one of the most popular currencies for trading crypto worldwide.
South Korea is buzzing with crypto fans. Ho Chan Chung, who works in marketing at a Korean analytics firm called CryptoQuant, says, “I used to put more money in stocks, but now I’m all about crypto.”
Upbit, launched in 2017 by Dunamu Inc., has become a big deal in the crypto world.
According to CCData, its trading worldwide has shot up to nearly 5% from just 1.4% in January 2021. With support from Kakao Corp. and Woori Technology Investment, Upbit hit a peak value of $15.7 billion during the pandemic.
