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- FSC Chairman Kim to review Upbit’s monopolistic role in the crypto market.
- Concerns were raised over Upbit’s influence on K Bank’s deposits and stability.
- Lawmakers question financial practices, urging regulatory investigation into market structure.
The Financial Services Commission (FSC) Chairman Kim Byeong-hwan has announced plans to review concerns regarding Upbit’s dominance in the virtual asset market, following criticism about the platform’s monopolistic structure.
FSC Launches Investigation Into Upbit
South Korea's Financial Services Commission said it will investigate the market monopoly structure of Upbit, South Korea's largest cryptocurrency exchange. Upbit is also the world's second-largest spot cryptocurrency exchange, and its market dominance began after establishing a…
— Wu Blockchain (@WuBlockchain) October 10, 2024
In detail, during a National Assembly audit on October 10, Democratic Party lawmaker Lee Kang-il raised the issue, emphasizing that Upbit, South Korea’s largest cryptocurrency exchange, now ranks as the second-largest globally.
Lee argued that Upbit’s dominant position began after its business partnership with K Bank, a digital bank, and expressed concern over the concentration of deposits from Upbit clients. According to Lee, 4 trillion KRW (approximately 20%) of K Bank’s total 22 trillion KRW in deposits are linked to Upbit, leading to concerns about potential instability.
Influence on K Bank’s Deposits Raised
“If Upbit transactions were to stop, K Bank could face a bank run,” he warned. He further questioned K Bank’s practice of offering 2.1% interest on Upbit’s customer deposits, despite the bank’s slim profit margins of less than 1%. Lee suggested that this financial arrangement violates the principle of separating financial institutions from commercial enterprises, raising red flags about the relationship between the two entities.
In response, Chairman Kim acknowledged the concerns, stating, “I understand the issue with Upbit’s dominance.” He also confirmed that K Bank’s initial public offering (IPO) underwent a thorough review and promised a broader investigation into the virtual asset market’s structure, leveraging the Virtual Asset Committee. Kim’s comments suggest that regulatory scrutiny of the sector may increase as authorities examine the ties between Upbit and K Bank.