Upbit, situated in Seoul’s upscale Gangnam district, has emerged as the dominant force in the South Korean crypto market, boasting over 80% of the country’s trading volumes, according to a Bloomberg report.
Its popularity among local investors has propelled it into the top five exchanges globally, positioning it as a direct competitor to industry giant Coinbase. Upbit’s clientele contributed to nearly one-fifth of the total deposits held by its primary banking partner, prompting scrutiny from a South Korean lawmaker.
New regulatory measures aimed at protecting investors may inadvertently reinforce Upbit’s market dominance. Compliance with these regulations, including bolstering reserves and enhancing transaction monitoring, favors well-established exchanges like Upbit, potentially widening the gap between them and their rivals.
Despite setbacks like the TerraUSD stablecoin collapse in 2022, South Korean traders remain fervently engaged in the crypto market. Official data indicates over 6 million Koreans, over 10% of the population, traded crypto on registered exchanges in the first half of last year.
Political interest in crypto investments has also surged in Seoul, with parliamentary candidates pledging to delay digital asset taxes or ease restrictions on investing in US Bitcoin ETFs.
Upbit, operated by Dunamu Inc., has steadily risen in prominence since its establishment in 2017. It now accounts for nearly 5% of global crypto trading volume, enjoying early support from South Korean internet giant Kakao Corp. and Woori Technology Investment.
During the pandemic-driven bull market, Dunamu’s valuation peaked at $15.7 billion, making it one of Korea’s most valuable startups. A strategic partnership with Kakao further solidified Upbit’s position, simplifying user onboarding.
The implementation of the Virtual Asset User Protection Act in July imposes stringent requirements on crypto exchanges, leading to the closure of smaller exchanges like Huobi Korea, Cashierest, and Coinbit. Bithumb briefly challenged Upbit’s dominance with a zero-fee promotion but saw a significant market share decline once the promotion ended.
Overall, Upbit’s success has reshaped the South Korean crypto landscape, prompting smaller exchanges to shutter while establishing itself as the market leader.