Upbit and Bithumb, South Korea’s leading cryptocurrency exchanges, reported strong first-quarter earnings due to growing interest in virtual assets and improving investor sentiment. Dunamu, the operator of Upbit, achieved an operating profit of 335.6 billion won ($247.5 million) in Q1 2024, up 58.39% from Q1 2023. Bithumb also saw significant growth, with Q1 2024 operating earnings of 62.1 billion won, a 283% increase from the previous year. A Bithumb official attributed this success to the exchange’s free-fee policy and membership benefits, which helped regain market share.
The increased trading volume and investor interest, partly driven by the approval of a Bitcoin spot ETF in the U.S. in January, fueled these earnings. This positive trend has persisted since the second half of 2023. According to the Financial Intelligence Unit (FIU), the market capitalization of domestic virtual assets rose by 53% to 43.6 trillion won, and average daily trading volume increased by 24% to 3.6 trillion won. Korean won deposits also grew by 21% to 4.9 trillion won.
With Bithumb’s strategic initiatives aligning with Upbit’s market dominance, a robust two-leader system has been established in the domestic market, exacerbating financial struggles for other exchanges. Among the 28 domestic Virtual Asset Service Providers (VASPs) registered with the FIU, only five, including Upbit and Bithumb, support Korean won transactions. The remaining 23 are coin-only exchanges, with 16 seeing minimal or no trading activity and seven planning to close.
Despite some profitability in other exchanges like Coinone, Korbit, and GOPAX, their share of transaction volume continues to decline. The Financial Services Commission advised caution when trading, storing, or dealing with virtual assets through these providers, noting an increasing number of VASPs ceasing operations.
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