After approval, can Bithumb shake Upbit’s crypto monopoly in South Korea

South Korea’s anti-money laundering unit recently approved Bithumb’s application to enable crypto services after a long wait. Almost 70 days to be precise.

Earlier today, Heo Baek-young, CEO of Bithumb, thanked its customers for accepting the exchange as a virtual asset business operator.

In the translated customer letter, Baek-young added,

“Bithumb is contemplating various ways to create a transparent ecosystem, such as the establishment of an investor protection committee that can manage and supervise illegal activities led by external experts for the first time in the industry.”

With that, the CEO also promised a strict listing process and investor protection as the exchange’s top priority.

Bithumb’s approval was long-awaited as it had applied to the Korea Financial Intelligence Unit (KoFIU) on September 9. Since then, competitors Upbit, Coinone, and Korbit had won the regulator’s approval.

With the watchdog’s green-light, Bithumb, like its other ‘big four’ counterpart can also allow crypto-to-won settlements.

A Bithumb official was quoted saying,

“This is part of an effort to have an internal control system comparable to that of the existing financial sector.”

Monopoly shake-up

In the past months, South Korea’s regulatory shake-up had also provided the largest exchange Upbit sort of a monopolistic advantage.

Source: Statista (Based on trading volume in September 2021)

Earlier, a local report had noted,

“In the process of implementing the reporting system, the opinion of both inside and outside the cryptocurrency industry is that Upbit’s monopoly system has become much stronger.”

It has an estimated foothold on 88% of the market. Experts now believe that Bithumb, as the nation’s second-largest cryptocurrency exchange, will be able to break that dominance.

It is noteworthy that Upbit had submitted its application in August and had received approval on 17 September. Korbit and Coinone, won approvals on 1 October and 12 November, respectively, after submitting their applications on September 10.

Reports speculated that the delay could have been on the back of an alleged fraud that involved Bithumb’s largest shareholder. Leading to Upbit’s head start.

With that, out of 29 crypto exchanges that applied for business registration with completed applications, only the ‘big four’ along with two other trading platforms have passed the prerequisites. Meanwhile, the faith of other applications is reportedly unclear. As the Financial Services Commission is required to decide on the application within 90 days of submission.