Korea's crypto exchanges need room to become financial platforms

Upbit, once the world's largest cryptocurrency exchange by trading volume, now finds itself in a vastly different position eight years later. In January 2018, Upbit recorded $7.57 billion in daily trading volume, surpassing Binance and Bithumb, which held second and third place respectively. Fast forward to 2021, and the situation has drastically changed.

Binance is now boasting over $10 billion in daily trading volume, while Upbit's volume is down to approximately $1 billion, and Bithumb trails behind at $436.2 million, according to CoinGecko.

The crypto market downturn has hit exchanges globally hard, but those with an international presence have sought to diversify their businesses. Overseas platforms have ventured into areas such as derivatives trading and staking, providing them with additional avenues to navigate through a prolonged industry slump. Unfortunately, Korean exchanges continue to operate primarily within the realm of spot trading under the existing regulatory framework.

This confines them to a narrower range of opportunities, making them more vulnerable when trading volumes dwindle.

In response to the competitive pressures, five Korean crypto exchanges have taken aggressive measures to lure market share by offering zero trading fees. This has sparked a price war as these exchanges vie for a larger customer base. The imbalance between the global and Korean exchanges is becoming increasingly difficult to overlook, particularly as the digital asset market expands beyond mere spot trading.

With institutional capital now entering the scene through Bitcoin and Ethereum spot exchanges, it is clear that the playing field is shifting.