The South Korean cryptocurrency exchange Upbit is under scrutiny due to concerns that it is becoming a monopoly, as highlighted by lawmaker MP Min Byeong-deok. Upbit, along with its banking partner K Bank, holds a significant portion of the crypto market share in South Korea, raising concerns about monopolization. While Upbit’s market share has decreased from over 80% to around 60%, the exclusive partnership between Upbit and K Bank has raised questions about competition in the market. K Bank has emerged as a dominant player in the crypto sector, overshadowing other banks involved in crypto exchange-related businesses.
The success of K Bank’s collaboration with Upbit is evident in its neobanking platform, which offers online account creation and accessibility to customers. This partnership has contributed to the growth of the crypto market, particularly during the COVID-19 pandemic. Despite efforts by other banks like Nonghyup (NH) and neobanking platforms like Kakao Bank to enter the crypto space, K Bank continues to maintain a significant share of the market. The relationship between K Bank and Upbit has led to a situation where nearly half of K Bank’s customers have accounts linked to crypto exchanges, raising concerns about market monopolization.
Lawmaker MP Min Byeong-deok has raised issues regarding Upbit’s token delisting procedures, describing them as opaque. He is seeking expert opinions on potential revisions to the Virtual Asset User Protection Act to enhance customer protection in the crypto market. The Democratic Party, under which Min operates, has expressed support for regulatory measures to address market monopolies and ensure investor protection. Furthermore, Min has been involved in efforts to advance the domestic crypto industry, including advocating for spot Bitcoin ETF approval.
Upbit and its operator Dunamu have previously faced scrutiny over potential monopolization of the crypto market in South Korea. In 2022, lawmakers and the Fair Trade Commission (FTC) launched investigations into Upbit’s market dominance and the broader issue of crypto exchange monopolies. The FTC guidelines classify companies with a market share exceeding 50% as monopolies, triggering regulatory interventions to prevent the growth of monopolistic practices. The FTC designated Upbit as the first official “conglomerate” in the domestic crypto sector, subjecting it to regulations prohibiting equity investments and loan guarantees with affiliate firms.
The regulatory environment in South Korea is evolving, with the upcoming enactment of the virtual asset user protection law set to bring new regulations to the crypto market. Lawmakers are exploring ways to enhance transparency and competition in the crypto sector, aiming to strike a balance between market growth and consumer protection. MP Min Byeong-deok’s advocacy for regulatory amendments aligns with broader efforts to foster a healthy and competitive ecosystem within the crypto industry. As South Korea’s crypto market continues to mature, stakeholders are working towards creating a balanced regulatory framework that supports innovation while safeguarding user interests.
