Crypto Market Dominance: Upbit Handles 80% of South Korea Trading Volume
Different platforms have unsuccessfully challenged the dominance of the exchange in the country and the upcoming regulatory framework has affected them.
A recent report revealed that South Korean exchange Upbit dominates the local crypto market with over 80%. Furthermore, Upbit rose to fifth place in the list of top five global exchanges.
Upbit Enters List of Top Five Global Crypto Exchanges
Media outlet Bloomberg reported on Upbit’s latest feat after eclipsing the Korean market. The main Korean stock exchange holds more than 80% of the country’s trading volume.
Notably, Upbit’s level of dominance has not been matched by other exchanges in any prominent crypto hub. According to official figures cited by Bloomberg, more than 6 million Koreans, around 10% of the population, traded cryptocurrencies in the first half of 2023.
The increase in volume during this bull run has propelled the exchange to fifth place among global exchanges. Upbit’s $2.84 billion daily trading volume is on par with Coinbase’s $2.86 billion.
According to the report, South Korea’s foreign exchange transactions accounted for almost a fifth of its banking partners’ total deposits last year. Similarly, altcoins account for 80% of Korean exchanges’ trading volume, while global platforms record much lower volume at 50%.
Despite the looming shadow of the $40 billion merger of Do Kwon and Terra Labs, the Korean market continues to grow and become a market with the “most enthusiastic cryptocurrency traders with a taste for high-risk, high-risk tokens.” reward” of the world.
Furthermore, recent reports revealed that the South Korean won surpassed the US dollar as the leading currency for cryptocurrency trading globally in the first quarter of 2024. The rise suggests mass appeal and growing popularity of cryptocurrencies among South Koreans.
As a result, campaigns for the upcoming elections attempted to attract voters, with candidates promising to work on regulations and taxes.
Does the New Regulatory Framework Favor Upbit’s Dominance?
South Korean regulators will implement the Virtual Asset User Protection Law in July 2024. The new regulatory framework will implement stricter requirements and consequences on exchanges, including possible life imprisonment for criminal acts.
Additionally, operators must “take measures to meet responsibilities” after attacks or system failures. The requirements require significant “capital and labor,” according to Nam Hyeon Joon, a spokesperson for Bithumb, Korea’s second-largest exchange.
The new regulatory landscape was “designed to protect investors” after the Terra Labs collapse, but has hit smaller exchanges. Platforms such as Huobi Korea, Cashierest and Coinbit have closed since the bill was passed last year.
Simon Seojoon Kim, CEO of venture capital firm Hashed, believes that well-resourced crypto exchanges like Upbit will make it easier to meet the requirements. “For existing and new participants, the cost of meeting these requirements could be substantial,” Kim said.
Korbit Research analyst Min Seung Kim agrees with this sentiment, adding that competition will be limited as trading remains “increasingly focused on the major exchange.”
Platforms trying to compete with Upbit’s dominance have launched zero-fee campaigns. According to the report, Bithumb briefly challenged Upbit after reaching a peak market share of 39.2% in January. However, participation fell by more than half after its promotion ended.
Ultimately, entering the South Korean crypto market remains difficult. As seen recently with Crypto.com, meeting the country’s regulatory requirements requires a defined strategy and vast resources.
By Leonardo Perez