A South Korean lawmaker accused the Financial Services Commission (FSC) of unfairly favoring Upbit, a major cryptocurrency exchange, over its domestic competitors. This claim arose during a recent National Assembly session where FSC Chairman Kim Byung-hwan faced tough questions.
“Squid Game” Reference: Competition Being Stifled
Democratic Party lawmaker Lee Kang-il criticized the FSC. He compared the situation to the popular drama Squid Game, where only one competitor survives while others perish. According to Lee, Upbit has gained an overwhelming market share while other exchanges struggle.
“The Financial Services Commission is playing Squid Game by favoring one company, Upbit, while killing off its competitors,” Lee stated.
Lee highlighted that Upbit controls over 70% of the crypto market’s deposit sales commissions. He argued that this dominance qualifies the exchange as a monopoly under South Korea’s Monopoly Regulation and Fair Trade Act. Chairman Kim acknowledged the concern and promised to investigate the market structure.
The Threat to South Korea’s Crypto Market Leadership
Lee expressed concern that South Korea risks losing its position as a leader in the global crypto market. He warned that the excessive concentration on a single exchange could lead to the marginalization of the entire domestic crypto industry.
“Upbit is the largest exchange in South Korea and the second largest globally. However, domestic exchanges are suffering,” Lee explained.
The lawmaker also criticized Upbit’s partner, K Bank. He noted that Upbit accounts for about 20% of K Bank’s deposits. If Upbit’s transactions were to halt, it could trigger a bank run at K Bank. This partnership, Lee argued, violates the principle separating finance and industry.
Need for Overseas Expansion
Lee stressed the importance of helping South Korean crypto exchanges expand globally. He argued that restrictions on domestic firms weaken their global competitiveness. He also pointed out the lack of liquidity connectivity with foreign fiat currencies as a significant drawback.
The lawmaker concluded by saying that while trillions of Korean won flow from domestic platforms to overseas exchanges each year, almost no money moves in the opposite direction. He called this a serious issue that regulators must address.
This isn’t the first time South Korean lawmakers have raised concerns about Upbit’s potential monopoly. Earlier in July, other Democratic Party members voiced similar criticisms.
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