South Korea's Crypto Market Struggles as Upbit and Bithumb Dominate 97% Share

Key Insights:

• South Korea's crypto market is dominated by Upbit and Bithumb, controlling nearly 97% as mid-sized exchanges struggle.
• Trading volumes in South Korea fell to $1.66B, down from $5B last month, due to new regulations and market changes.
• Mid-sized exchanges failed to maintain market share despite fee waivers, while large platforms thrive with unique altcoin listings.

South Korea's cryptocurrency market is in steep decline, mid-sized exchanges feel the hurt at the bottom of their pockets. Just how dominant Upbit and Bithumb are is beginning to come into view: almost 97% of all market share held just by these two giant exchanges.

It seems that with trade volumes shrinking along with the advent of new regulations, it is very hard for smaller exchanges to manage and operate anymore.

The Act on the Protection of Virtual Asset Users, implemented in July, has reduced trading volumes. Consequently, large exchanges, backed by substantial capital, continue to thrive, while mid-sized platforms are losing market share.

Market Dominance And Decline in Trading Volumes

Moreover, data from CoinGecko highlights the impact. As of September 4, the total 24-hour trading volume on the country’s five won-based exchanges stood at $1.66 billion, down from over $5 billion last month.

This decrease represents a nearly 10% drop in trading volumes compared to March when Bitcoin prices surged. Significantly, Upbit and Bithumb maintain dominance, with 68.3% and 28.4% market shares, respectively. Smaller platforms like Coinone (2.7%), Korbit (0.6%), and Gopax (0.1%) are facing difficulties staying relevant.

However, mid-sized exchanges attempted to compete by waiving fees in late 2023 and early 2024. Platforms like Korbit and Gopax temporarily gained market share, but their efforts faltered once fees were reinstated.

Consequently, these exchanges are struggling to maintain user engagement, as large platforms continue to dominate by listing unique altcoins.

Regulatory Measures and Innovations in DeFi

Upbit and Bithumb exchanges are being inspected by the South Korean government more frequently. These inspections serve the objective of confirming compliance with anti-money laundering and investor protection legislation. The regulators also hope to put an end to illicit market practices by imposing harsh fines.

Platforms like ETHFI and Jito Network are also advancing by providing delegated staking and liquidity staking options. As the market develops under regulatory scrutiny, these events are indicative of broader tendencies in decentralized finance (DeFi). Regulators in South Korea are still dedicated to promoting openness, safeguarding investors, and maintaining the stability of the digital asset market.