South Korea’s financial regulators to investigate Upbit’s monopoly: report

Financial Services Commission Chairman Kim Byung-hwan said he would “investigate it” regarding the market dominance of the country’s leading crypto exchange, Upbit.

At a meeting of the national assembly, lawmaker Lee Kang-il raised questions about Upbit’s dominance and its close collaboration with the local bank, K-Bank.

The online banking company holds a significant portion of Upbit’s deposits, according to an Oct. 10 report in local media.

Monopoly concerns

“I am aware of the problem of Upbit’s monopolistic system,” Lee said before adding (translation):

“The monopolistic trend towards one company, Upbit, started after its business partnership with K-Bank.”

He then raised an issue about Upbit accepting a significant portion of deposits from K Bank, which will soon undergo an initial public offering (IPO).

The lawmaker said Upbit accounts for about 20% of K-Bank’s 22 trillion KRW (about $16.3 billion) deposits, adding: “If Upbit transactions are cut, it will result in a bank in K-Bank”. He also criticized the bank, questioning whether it was reasonable for such an organization with a profit margin of less than 1% to offer 2.1% for deposits from Upbit customers.

“The influence between Upbit and K-Bank violates the principle of separation of industry finance,” he added.

FSC Chairman Kim responded by stating that the review of K-Bank’s IPO has been thoroughly examined,” adding, “Since we have a virtual asset committee, we will review the situation (Upbit) comprehensively.”

This week, South Korea’s Ministry of Strategy and Finance announced that it is reviewing measures to regulate stablecoins more strictly.

Upbit Huge in South Korea

According to CoinGecko, the centralized exchange Upbit established in 2017 has a daily trading volume of $1.2 billion. About 10% of this volume is the BTC/KRW pair, with altcoins such as Chilliz (CHZ) and Sui (SUI), also popular among Korean crypto traders.

Trading volume on the stock market rose to $15 billion during the 2024 market peak in mid-March. In comparison, the world’s leading exchange, Binance, has a daily forex volume of around $12.5 billion.

Earlier this year, CryptoPotato reported that Upbit dominated 80% of South Korea’s crypto trade and ranked fifth globally. Bithumb is the second largest crypto exchange in Korea, with a daily volume of $700 million.

In late September, Upbit announced a change in its privacy policy to store user data on Amazon Web Services (AWS) servers in the US, effective October 1.

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