Korea’s largest cryptocurrency exchange, Upbit, is under scrutiny for monopolistic practices, with accusations that it controls up to 70% of the nation’s crypto market. Critics argue that Upbit’s dominance could stifle competition and force operators and traders of emerging digital currencies to rely solely on the platform, posing a significant threat to the broader cryptocurrency industry.
The concerns were raised during a recent National Assembly audit on the Financial Services Commission (FSC), where Rep. Lee Kang-il of the Democratic Party of Korea highlighted that Upbit’s 24-hour trading volume had exceeded $1.18 billion. This volume equates to approximately 70 to 80% of the country’s cryptocurrency market, reinforcing fears of monopolization.
“Controlling more than 70 percent of a market is certainly seen as a monopoly, and the financial regulator should take action for smaller competitors to thrive,” said Seoul-based activist group Citizens United for Consumer Sovereignty. The group emphasized that unchecked growth of a single platform could harm the entire industry, noting that other sectors with heavy reliance on digital technology have seen anti-monopoly interventions from the government.
Adding to the debate is Upbit’s relationship with Kbank, an internet-only lender. Upbit reportedly holds around 20% of Kbank’s total deposits, raising concerns that the exchange could exert undue influence over the bank, potentially leading to significant risks. Market observers worry that in extreme situations, this entanglement could destabilize both entities.
Despite the mounting criticism, supporters of Upbit defend the exchange, attributing its market dominance to natural competition in a capitalist market. They argue that regulatory intervention could unfairly target the company. “Upbit’s growth is a result of the free market, and regulatory intervention at this stage could send the wrong message,” some have noted.
Lee Sang-geun, a professor at Sogang University’s business school, offered a nuanced perspective, suggesting that addressing monopolistic concerns within the cryptocurrency industry should be done carefully. “Any attempt to curb monopolies at this point can cause a bigger problem as current regulations do not stipulate anti-monopoly measures in the newly emerging digital coin industry,” he said. He recommended that the crypto asset industry be integrated into the broader financial sector to develop appropriate long-term solutions.
Meanwhile, FSC Chairman Kim Byung-hwan acknowledged the concerns raised about Upbit’s market position. He confirmed that the regulator would be looking into the exchange’s dominance as part of broader efforts under the virtual asset committee, an initiative aimed at addressing the growing role of digital currencies in Korea’s financial system.
As the debate unfolds, it remains to be seen whether regulators will take decisive action or if Upbit’s dominance will continue to shape the future of Korea’s cryptocurrency landscape.