South Korea's Financial Services Commission (FSC) plans to investigate the cryptocurrency exchange Upbit over concerns about its market dominance and close ties with K Bank.

Cryptocurrency Market Power Concentration

FSC chairman Kim Byoung-hwan noted intentions to thoroughly investigate Upbit’s market dominance. The remarks came after a parliamentary session where questions about risks associated with a single entity's market share were raised. Upbit holds about 80% of South Korea's cryptocurrency market with over 8 million users.

Relationship with K Bank and IPO

Democratic Party lawmaker Lee Kang-il expressed concern over Upbit's partnership with digital bank K Bank. He noted the potential risks related to K Bank’s upcoming IPO and its reliance on Upbit deposits, amounting to 4 trillion won, 20% of K Bank's total deposits.

Regulatory Responses

FSC has increased oversight of the crypto sector, implementing strict anti-money laundering measures and investor protection policies. Regulators introduced rules mandating virtual asset service providers to hold up to 80% of user assets in cold storage. A real-time monitoring system has also been established to oversee cryptocurrency exchanges.

South Korean regulators continue to strengthen their grip on the cryptocurrency market, responding to potential dominance by individual players and alleged risks to the banking sector.