09 Sep 2021 · 2 min read

S Korean MP Tells Gov’t: ‘Don’t Let a Crypto Monopoly Emerge’

Source: Adobe/burdun

A South Korean ruling party lawmaker has urged the government to prevent Upbit, the nation’s market-leading crypto exchange, from creating a de facto “monopoly” – insisting that Seoul should ensure the survival of “at least three or four” rival exchanges.

As previously reported, Upbit is so far the only exchange in the country to have submitted its official application to become a licensed trading platform operator after sealing a deal with the neobank K-Bank. The latter has established a lucrative and successful partnership with Upbit in recent months.

But although industry insiders have told both Cryptonews.com and members of the domestic press that Upbit’s three biggest rivals – Korbit, Bithumb, and Coinone – could be ready to submit their own documentation to the regulator before the week is out, thus far Upbit remains the only exchange on track to stay open after a September 24 deadline.

Per Asia Kyungjae, Noh Woong-rae, the Democratic Party MP for the affluent Seoul district of Mapo and a fierce critic of President Moon Jae-in’s administration, stated that allowing “at least” the aforementioned exchanges to survive would benefit customers.

Noh was quoted as warning:

“If a monopoly market emerges, a cryptocurrency exchange could list or delist coins at will, or raise cryptocurrency transaction fees at will.”

The MP added that the Chairman of the Fair Trade Commission, Joh Sung-wook, had “also said that he would look into” the issue of crypto exchange monopolies.

Meanwhile, nine rival South Korean crypto exchanges, including Huobi Korea, have issued a joint statement effectively pleading for the government not to kill off the sector.

News1 reported that the exchanges echoed Noh’s warning, with the Hanbitco CEO and Korea Blockchain Association Exchange Committee Chairwoman Kim Sung-a remarking:

“The size of the cryptocurrency industry is growing globally. But [in South Korea], it is moving in a direction that will allow for a lopsided monopoly to emerge. That’s the wrong direction.”

Representatives from larger exchanges such as ProBit, Flybit, and Foblegate were also in attendance.

Officials from the exchanges complained that the government and the regulatory Financial Service Commission (FSC) were adopting an “irresponsible” and “inflexible” approach that would ultimately damage businesses and customers alike.

The major sticking point for exchanges such as the aforementioned is the thorny issue of banking contracts. The FSC has insisted that all exchanges that offer KRW-to-crypto and crypto-to-fiat trading partner with domestic banks, with the latter shouldering the burden of financial risk.

Banks have voted with their feet, with most flat out rejecting the idea of working with exchanges under these terms.

One (unnamed) exchange official was quoted as saying:

“Risk assessment should solely be the responsibility of an exchange, not a bank. But the financial authorities have shifted the responsibilities to banks.”

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Learn more: 
- Think Tank Tells South Korean Banks: Start Offering Crypto Custody Services 
- 24 Crypto Exchanges to Close in South Korea – and 18 More Could Follow 

- Crypto Entrepreneurs On Debanking, 'Bullying' By Banks, Govt Agencies
- Coinbase vs. ‘Sketchy’ SEC Case Reminds of Crypto Regulation Challenges