South Korea’s Financial Services Commission (FSC) is investigating the monopoly structure of the crypto market centered around Upbit, the world’s second-largest exchange
In the most recent development on Thursday, the Financial Services Commission (FSC) of South Korea announced that it would investigate the monopoly structure of the country’s crypto market, which is concentrated around the crypto exchange Upbit.
This is a significant setback for Upbit, the second-largest spot crypto exchange in the world. The broader crypto market has already been experiencing selling pressure, as Bitcoin (BTC) and Ethereum (ETH) both experienced a decline of over 2.3%.
Upbit’s Collaboration with K-Bank Regarding Scanner
On Thursday, October 10, South Korea’s Democratic Party lawmaker Lee Kang-il expressed his apprehensions regarding the increasing monopoly in the country’s crypto landscape during the National Assembly State audit. He specifically emphasized the dominance of Upbit, the country’s main cryptocurrency exchange.
Kim Byung-hwan, Chairman of the Financial Services Commission (FSC), responded to this by stating, “I am cognizant of the issue with Upbit’s monopoly system.”
Additionally, Representative Lee asserted that Upbit has expanded its market share due to its partnership with K-Bank. Additionally, he expressed apprehension regarding the substantial proportion of K Bank’s deposits held by Upbit, particularly in light of the bank’s forthcoming initial public offering (IPO). The legislator included:
“Out of K Bank’s 22 trillion won in deposits, Upbit deposits account for 4 trillion won, or 20%. If Upbit transactions are cut off, a bank run on K Bank will occur.”
Lee criticized K Bank’s decision to offer a 2.1% interest rate on deposits from Upbit customers, despite the bank’s operational profit margin being below 1%, while questioning the financial arrangement between K-bank and Upbit. Additionally, he asserted that this tight relationship contradicts the principle of separating finance from industry.
In response to this, FSC Chairman Kim stated, “I am of the opinion that the K-Bank listing review has been thoroughly reviewed.” We will thoroughly evaluate the issue through the Virtual Asset Committee.
Conversely, Upbit has maintained its commitment to regulatory compliance by implementing the requisite measures. In July, it implemented measures to prevent insider crypto trading while adhering to the Virtual Asset User Protection Act (VAUPA).
Is a crypto market crash imminent?
Bitcoin (BTC) has again reversed its trajectory from $65,000 this week, resulting in significant selling pressure in the crypto market. As of press time, the BTC price has declined by 2.5% in the past 24 hours, falling below $61,000.
In 2018, Upbit’s executives were subjected to a thorough investigation regarding allegations of fraud. The crypto market experienced a significant decline as a result of the development. Investors should not disregard the future, as the exchange has achieved even greater dominance in the global crypto space than it did in 2018.
At present, investors are anticipating the September publication of the US Consumer Price Index (CPI). The market is currently pricing in a probability of rate decreases of less than 50 basis points in November. Also experiencing selling pressure is the altcoin space, as the leading altcoins have each experienced a 2% decline.
