South Korea’s financial regulator has launched an investigation into the market dominance of Upbit, the nation’s largest crypto exchange. According to local media reports, the Financial Services Commission of South Korea has said that it will look into Upbit’s market monopolistic structure.
In addition to being a big name in South Korea, Upbit is also the second-biggest spot cryptocurrency exchange globally. Its domination in the industry started when it partnered with K-Bank. Allegedly the investigation is also linked to the partnership between Upbit and K Bank.
Upbit and K Bank Partnership: Why is It A Problem?
The financial regulator in South Korea have alleged that Upbit at present enjoys an excessive concentration of power. Not only has it resulted in a market monopoly for Upbit, but it has also raised questions about the upcoming IPO of K Bank.
FSC’s concerns revolve around the fact that deposits of K Bank, which are about to go through an initial public offering (IPO), are largely made up of deposits from Upbit.
A major chunk of these deposits -20% or 4 trillion won of K Bank’s 22 trillion won in deposits to be precise- are made up of Upbit deposits. This raises the question that if a bank that runs on someone else deposits goes for IPO, what will happen in the future if Upbit transactions are stopped?
According to a loose translation of the Korean report, the FSC has raised questions like “Is it fair that K Bank, which makes less than 1% on an operating profit margin, gives 2.1% of its deposits to Upbit users?
The regulatory body has also shed light on the fact that the influence between Upbit and K Bank violates the principle of separation of finance and industry.
Upbit’s market Growth Comes Amid Growing Userbase in South Korea
Upbit has always placed a high priority on customer safety, transparency, and dependability and provides a quick and safe trading experience through its user-friendly web platform and mobile apps.
Upbit has obtained important security certifications, such as ISMS-P and ISO/IEC, since the exchange’s 2017 inception, helping it to gain traction in the market.
The growth runs parallel with the rise in crypto use in South Korea. According to a Statista report, when Bitcoin prices hit an all-time high in the first half of 2021, almost 10% of South Korea’s population invested in cryptocurrencies, more than doubling from the year before when the country saw its first crypto bubble.
According to estimates, South Korea has the third-largest cryptocurrency market worldwide. Even though South Korean cryptocurrency exchanges made up over 9% of the world market in August 2021, the Korean Won is one of the top five currencies used to trade Bitcoin.