South Korea’s Financial Services Commission (FSC) has announced that it will investigate the country’s monopoly structure in the cryptocurrency market. The move is a blow to Upbit, the world’s second-largest spot cryptocurrency exchange. The crypto market is already under selling pressure, with major assets like Bitcoin and Ethereum down 2.3%. This development could add further pressure.
Upbit and K-Bank partnership under the spotlight
During the National Assembly State inspection held on Thursday, October 10, South Korea’s Democratic Party lawmaker Lee Kang-il voiced concerns about the growing monopoly in the country’s cryptocurrency scene. Lee specifically highlighted Upbit’s dominance in the sector. Financial Services Commission Chairman Kim Byung-hwan responded to these concerns. “I am aware of the problem with Upbit’s monopoly system,” he said in response. Lee also emphasized that Upbit has increased its dominance in the market following its partnership with K-Bank. The lawmaker noted that 20% of K Bank’s 22 trillion won in deposits, or 4 trillion won, came from Upbit.
He said this poses a risk, especially ahead of K Bank’s upcoming initial public offering (IPO). Lee said, “If Upbit’s transactions are cut off, there could be a banking panic on K Bank.” Lee also questioned the financial arrangements between K-Bank and Upbit. He criticized K Bank’s decision to offer 2.1% interest to Upbit customers. He expressed concern that the bank offers such a high interest rate despite its operating profit margin being below 1%. He argues that this close relationship violates the principle of separating finance from industry. In response to these criticisms, FSC Chairman Kim Byung-hwan said, “I think the investigations conducted for K-Bank’s IPO are sufficient. We will thoroughly review the matter through the Virtual Asset Committee.”
Upbit’s regulatory measures draw attention
On the other hand, Upbit continues to take the necessary steps on the regulatory front. In July, the exchange took measures to prevent insider crypto trading in order to comply with the Virtual Asset User Protection Act (VAUPA). These regulations are seen as important steps to ensure that the company operates in compliance with legal frameworks in both local and global markets. However, despite regulatory scrutiny and increasing monopoly claims, uncertainties over the exchange’s future are causing concern among investors.
What is the latest situation in the cryptocurrency market?
The cryptocurrency market is experiencing strong selling pressure. As the price of Bitcoin (BTC) has retreated from $65,000 again this week. In the last 24 hours, the BTC price has fallen another 2.5% to below $61,000. In 2018, executives at the crypto exchange Upbit came under intense scrutiny over fraud allegations. This development caused the crypto market to collapse at the time. Today, Upbit’s dominance in the global crypto market is much greater than in 2018. Therefore, investors should not underestimate possible developments.
Investors are currently waiting for the US Consumer Price Index (CPI) data to be released for September. The market has begun to price in the possibility of interest rate cuts below 50 basis points in November. In the meantime, selling pressure is also increasing in the altcoin market, and leading altcoins have lost 2% of their value.
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