A South Korean lawmaker has accused the nation’s top regulator, the Financial Services Commission (FSC), of favoring Upbit, the largest crypto exchange in the country, at the expense of its competitors. He accused the FSC of allowing Upbit to build a monopoly and corner the market share while its rivals faded away. Drawing an analogy with the popular show Squid Game, the lawmaker likened the FSC’s actions to the deadly game in which only one player survives, stating that Upbit’s market dominance made it a monopoly under the Monopoly Regulation and Fair Trade Act. FSC Chairman Kim Byung-hwan acknowledged the concerns raised and pledged to investigate the monopoly structure in the crypto market and Upbit’s position.
The South Korean lawmaker further raised concerns that the country’s status as a leader in the cryptoasset market was at risk due to the excessive concentration of the market on Upbit. He warned that South Korea could be marginalized in the global crypto market if domestic exchanges continued to fade away, leaving Upbit as the unrivaled leader. He also criticized Upbit’s partner bank, K Bank, and its plans for an initial public offering (IPO), highlighting the risks associated with the close relationship between the two entities. The lawmaker called for a thorough review of the K Bank IPO bid to prevent any negative consequences for depositors.
In response to the lawmaker’s comments, FSC Chairman Kim Byung-hwan stated that the commission would conduct a comprehensive review of the K Bank IPO bid. The lawmaker urged regulators and government officials to support domestic crypto exchanges in developing overseas expansion channels to enhance global competitiveness. He argued that the tight regulations in the domestic market were hindering funds from coming in from overseas, leading to a one-sided flow of funds from domestic platforms to overseas exchanges. The lack of linkage with global exchanges and low liquidity connectivity with fiat currencies were identified as serious issues that needed to be addressed.
The lawmaker emphasized the importance of overseas expansion for domestic crypto exchanges to prevent further monopolization of the market by a single entity. He highlighted the need for regulatory support to facilitate the movement of funds in both directions and increase liquidity connectivity with global exchanges. The lack of overseas expansion channels for domestic exchanges was identified as a key factor contributing to the deepening monopoly situation in the cryptoasset market. The lawmaker’s calls for regulators and government officials to intervene and help domestic exchanges establish global connections reflect the growing concerns about the concentration of market power in just one exchange.
South Korean lawmakers have previously questioned Upbit’s potential monopoly status, with concerns raised by Democratic Party members as early as July of the same year. The ongoing scrutiny of Upbit’s market dominance and the impact it has on the broader crypto market in South Korea highlights the need for regulatory intervention to prevent monopolistic practices and ensure a level playing field for all exchanges. The accusations of regulatory favoritism and the calls for overseas expansion channels underscore the complex dynamics of the crypto market in South Korea and the challenges faced by domestic exchanges in a rapidly evolving industry.
