The Rise of Upbit: Dominating the Korean Crypto Market and Global Trading Volume
The Rise of Upbit: South Korea’s Dominant Crypto Exchange
Upbit, a Seoul-based exchange located in the upscale Gangnam district, has taken the Korean crypto market by storm. With over 80% of the trading volumes in Korea, Upbit has solidified its position as the top exchange in the country, surpassing even industry giant Coinbase.
The platform’s popularity among local investors has propelled it to the ranks of the top five exchanges globally, a remarkable achievement for a relatively young exchange. Upbit’s customers alone accounted for nearly one-fifth of the total deposits held by its primary banking partner, a fact that has drawn criticism from some quarters.
New regulatory measures introduced to protect investors may inadvertently further strengthen Upbit’s dominance in the market. These regulations require exchanges to bolster their reserves, obtain investor protection insurance, and enhance monitoring of suspicious transactions, all of which require significant capital and manpower. Established exchanges like Upbit are better positioned to meet these requirements, potentially widening the gap between them and their competitors.
Despite setbacks such as the collapse of the TerraUSD stablecoin in 2022, South Korean traders remain enthusiastic participants in the crypto market. Official data shows that over 6 million Koreans, representing over 10% of the population, engaged in crypto trading on registered exchanges in the first half of last year. The Korean won has even surpassed the US dollar as the most traded currency against crypto assets globally.
Upbit, operated by fintech firm Dunamu Inc., was established in 2017 and has steadily grown in prominence. The exchange now accounts for nearly 5% of the global crypto trading volume, a significant increase from just a few years ago. To solidify its position, Upbit forged a strategic partnership with Kakao, the operator of the dominant local mobile messaging app, enabling users to seamlessly synchronize their accounts.
With the implementation of the Virtual Asset User Protection Act in July, South Korean regulators are imposing stringent requirements on crypto exchanges, leading to the closure of smaller exchanges unable to compete. Upbit’s success has prompted smaller exchanges to close down, unable to compete with its dominant position.
As the crypto market continues to evolve, Upbit’s dominance in South Korea shows no signs of waning. With regulatory changes and shifting market dynamics, the exchange is poised to maintain its stronghold on the Korean crypto market for the foreseeable future.
