Upbit competes with international giants like Coinbase and controls a huge portion of the cryptocurrency trading market in South Korea.
Headquartered in South Korea, Upbit is a cryptocurrency platform that handles more than 80% of trades in the country, and is also one of the top five exchanges in the world in terms of trading volume.
According to a Bloomberg study, about 25% of all deposits made by Upbit's main banking partners in 2017 came from its clients.
Nevertheless, the crypto community is concerned about Upbit's takeover of the South Korean crypto market. Upbit's dominance has drawn criticism, especially as South Korea prepares to pass new legislation to protect investors in the wake of the TerraUSD stealthcoin crash in 2022.
The upcoming implementation of the Virtual Asset User Protection Act, which will take effect in July, will place strict restrictions on cryptocurrency exchanges.
The CEO of Korean venture capital firm Hashed, Simon Seojoon Kim, echoed similar sentiments, noting that exchanges with more resources, such as Upbit, will have an easier time complying with the new regulations, which could lead to a widening gap between market leaders and less well-equipped competitors.
The regulatory hurdles have already affected foreign exchanges considering entering the Korean market. Singapore-based exchange Crypto.com recently announced that its planned debut in South Korea has been delayed due to the need for additional negotiations with regulators.
After the crypto regulation legislation was passed last June, smaller exchanges such as Coinbit, Cashierest, and Huobi Korea closed down. Analysts believe that competition will be hindered, while Upbit will be able to easily comply with the new rules.
Interest in cryptocurrencies in South Korea is growing despite the country's tightening legal situation. More than six million Koreans, or over 10% of the country's population, regularly trade cryptocurrencies, with the won being the most traded cryptocurrency in the world.
The country continues to be a hub for cryptocurrency enthusiasts. The Head of Marketing at Korean analytics firm CryptoQuant, Ho Chang Chung, said, "I used to invest more in stocks, but now I'm all about cryptocurrencies."
Since its launch in 2017 by Dunamu Inc., Upbit has become a major player in the cryptocurrency space. The exchange's trading volume has grown from 1.4 percent in January 2021 to around 5 percent, according to CCData. Backed by Woori Technology Investment and Kakao Corp., Upbit has reached a peak valuation of $15.7 billion.
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