Financial Services Commission Chairman Kim Byung-hwan said he would “look into it” regarding the market domination of the country’s leading crypto exchange Upbit.
In a national assembly meeting, legislator Lee Kang-il raised issues about Upbit’s dominance and its close partnership with the local bank, K-Bank.
The online banking firm holds a significant portion of Upbit’s deposits, according to an Oct. 10 report in local media.
Monopoly Concerns
“I am aware of the issue of Upbit’s monopolistic system,” Lee said before adding [translation]:
“The monopolistic trend toward one company, Upbit, started after its business partnership with K-Bank.”
He then raised an issue about Upbit taking up a significant portion of K Bank’s deposits, which is set to undergo an initial public offering (IPO) soon.
The lawmaker said Upbit accounts for around 20% of K-Bank’s 22 trillion KRW (around $16.3 billion) deposits, adding, “If Upbit transactions are cut off, a bank run on K-Bank will occur.” He was also critical of the bank, questioning whether it was reasonable for such an organization with a profit margin of less than 1% to offer 2.1% for Upbit customer deposits.
“The influence between Upbit and K-Bank violates the principle of separating finance from industry,” he added.
FSC Chairman Kim responded by stating that the IPO review of K-Bank has been thoroughly examined,” adding, “Since we have a virtual asset committee, we will review the [Upbit] situation 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 2017-established centralized exchange Upbit has a daily trading volume of $1.2 billion. Around 10% of that 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 exchange spiked to $15 billion during the 2024 market peak in mid-March. Comparatively, the world’s leading exchange, Binance, has a currency daily volume of around $12.5 billion.
Earlier this year, CryptoPotato reported that Upbit dominated 80% of South Korea’s crypto trading and was ranked fifth globally. Bithumb is Korea’s second-largest crypto exchange, with $700 million in daily volume.
In late September, Upbit announced a change in its privacy policy to store user data on US Amazon Web Services (AWS) servers, effective from Oct. 1.