Upbit, a prominent cryptocurrency platform based in South Korea, has solidified its position as a major player in the global cryptocurrency exchange market. Responsible for over 80% of the country’s trading activity, Upbit has risen to become one of the top five exchanges worldwide in terms of trading volume. This significant market share has garnered attention and scrutiny, especially as South Korea prepares to implement new regulations to safeguard investors in the aftermath of the TerraUSD stablecoin collapse in 2022.
The upcoming regulations, scheduled to come into effect in July under the Virtual Asset User Protection Act, are expected to impose stringent requirements on cryptocurrency exchanges. These measures include the need to increase reserves, enhance investor protection, and monitor suspicious transactions. However, there are concerns that these regulations could further solidify Upbit’s dominance in the Korean market, potentially widening the gap between market leaders and smaller competitors.
Nam HyeonJoon, a spokesperson for Bithumb, South Korea’s second-largest trading platform, has highlighted the significant challenges posed by the new regulatory framework. Compliance with the impending regulations will require substantial capital and manpower, potentially creating barriers for smaller exchanges to overcome. Furthermore, international exchanges looking to enter the Korean market, such as Singapore-based Crypto.com, have faced obstacles and delays due to regulatory scrutiny and concerns regarding anti-money laundering practices.
The regulatory challenges have already had an impact on the Korean cryptocurrency market, with smaller exchanges like Huobi Korea, Cashierest, and Coinbit closing since the passage of the crypto law in June. Analysts predict that Upbit, with its substantial resources and established market position, is well-positioned to meet the new regulations and maintain its stronghold in the market. As a result, competition is increasingly concentrated around the top exchange, further solidifying Upbit’s dominance in the industry.
Despite the regulatory landscape and challenges faced by competitors, South Korea’s enthusiasm for cryptocurrency remains strong. With over six million active cryptocurrency traders, representing more than 10% of the population, the country has emerged as a significant hotspot for crypto enthusiasts. The won has also become one of the most traded currencies against crypto-assets globally, highlighting the country’s deep involvement in the cryptocurrency market.
Launched in 2017 by Dunamu Inc., Upbit has quickly established itself as a key player in the cryptocurrency market. Its trading volume globally has surged to nearly 5%, up from 1.4% in January 2021, demonstrating its rapid growth and increasing market influence. Backed by Kakao Corp. and Woori Technology Investment, Upbit reached a peak valuation of $15.7 billion during the pandemic, further solidifying its position as a major player in the cryptocurrency exchange market.
