The South Korean Financial Services Commission (FSC) has opened an investigation into Upbitthe largest crypto exchange in the country.
The financial regulator aims to learn about the operational structure of the exchange and the crypto asset market monopoly in South Korea.
This sudden move from Upbit comes amid a broader struggle in the crypto market, with Bitcoin and Ethereum facing significant price drops. Recent developments raise concerns about further pressure on market prices.
South Korean Financial Regulator Investigates Rising Crypto Exchanges Over Market Monopoly
South Korea’s financial regulator, the Financial Services Commission, has opened an investigation into the country’s largest crypto exchange, Upbit.
This decision follows the decision of the National Assembly audit. During the session, Democratic Party lawmaker Lee Kang-il highlighted the growing monopoly in the South Korean crypto landscape.
The lawmaker raised concerns over Upbit’s dominance in the country’s crypto space. Lee Kang-il mentioned that Upbit leveraged its collaboration with K-Bank to strengthen its market dominance. He noted that the the relationship between the two entities violates the principle of differentiation of finance and industry.
Again, the lawmaker highlighted that Upbit holds a substantial percentage of K-Bank’s deposits as the bank prepares for its upcoming IPO (initial public offering).
Rep. Lee said, “Of K Bank’s 22 trillion won deposits, Upbit deposits account for 4 trillion won, or 20 percent. If Upbit transactions are interrupted, a banking transaction on bank K will occur.
Additionally, the lawmaker criticized some of K-Bank’s operations and special incentives given to Upbit customers. He explained that although the the bank’s operating profit margin is less than 1%, it still offers Upbit customers a 2% interest rate on deposits.
FSC Chairman Kin Byung-hwan reacted to the lawmaker’s claims. First, Kim acknowledged Upbit’s monopolistic structure within the country’s crypto ecosystem.
Kim also revealed that the commission had conducted an in-depth review of K-bank’s listing. However, he promised that the regulator engage in another comprehensive review via the Virtual Assets Committee.
Upbit is South Korea’s largest crypto exchange, with a user base of over 80 million. The platform supports over 241 crypto assets and 372 trading pairs. It has nearly 5.72 million monthly visits and a 24-hour trading volume of over $1.18 billion..
Upbit has made significant efforts to comply with South Korean crypto regulatory standards. According to the Virtual Asset User Protection Actin July, the exchange implemented reliable measures to eliminate insider crypto trading,
The crypto market is in turbulence and could it lead to further price drops?
Crypto market faces turbulence as bears release more pressure, data shows CoinMarketCap. Bitcoin and Ethereum have already lost most of their recovered value in recent days, with most assets playing in the red.
BTC slipped from the $65,000 zone and is trading at $61,031 as of 6:32 a.m. EST on October 10. Bitcoin has fallen almost 2% in the past 24 hours, while Ethereum price is now hovering around $2,393.
Notably, in 2018, the crypto market suffered a major blow from event surrounding the investigation into Upbit executives for alleged fraud.
Thus, many fear that even though the crypto exchange has gained dominance globally, the recent investigation could have a drastic impact on the crypto landscape.
