Key Points
- Crypto.com plans to launch retail trading services in South Korea, replacing local exchange OK-BIT.
- Despite regulatory hurdles, Crypto.com obtained necessary approvals and is actively seeking a local banking partner.
Crypto.com, a significant player in the global digital asset exchange market, is making a strategic entry into the South Korean market. On April 2nd, 2024, the company announced its intent to launch retail trading services on April 29th. This move effectively replaces the services offered by the recently acquired local exchange, OK-BIT.
Eric Anziani, President and Chief Operating Officer of Crypto.com, expressed his excitement about the launch. He emphasized the importance of the South Korean market to the company’s growth and noted the country’s active crypto community.
Regulatory Approvals and Challenges
Crypto.com secured regulatory approval and necessary registrations under the Electronic Financial Transaction Act and as a Virtual Asset Service Provider (VASP) in August 2022. The company is committed to operating within the legal framework and adhering to ethical and risk management principles.
The company’s Korean platform, Crypto.com App, faces regulatory challenges in South Korea, known for its stringent regulations. Unlike the company’s offerings in other regions, the platform will not cater to institutional investors due to South Korean regulations prohibiting direct crypto investment by South Korean institutions.
Moreover, South Korean laws require domestic exchanges to collaborate closely with banking institutions to enable fiat-to-crypto trading. This measure is a prudent protection against potential money laundering and market manipulation risks. OK-BIT, which lacked such an alliance, only provided crypto-to-crypto trading options. Crypto.com acknowledges this limitation during its initial launch phase and is actively seeking a local banking partner to deliver a comprehensive trading experience.
South Korea’s Crypto Landscape
South Korea is one of the largest and most active crypto markets. The combined daily trade volume of its five fully licensed platforms, Bithumb, Upbit, Korbit, Coinone, and Gopax, nears $3 billion. This considerable volume, even during recent market declines, underscores the opportunity Crypto.com sees in the area.
Crypto.com’s entry adds another competitor to the South Korean crypto market. Last year, Binance, a major crypto exchange, gained traction by acquiring a controlling stake in Gopax, a domestic exchange struggling with liquidity challenges. Despite the acquisition, Binance faced challenges entering the South Korean market due to regulatory scrutiny. Local authorities reportedly denied approving Gopax’s structural changes over Binance’s legal issues in the U.S. Binance has been actively pursuing compliance measures, including reducing its shareholding in Gopax and stepping down as its largest shareholder.
