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| The logo of Korea's dominant crypto exchange, Upbit, is seen in front of its headquarters in Seoul. Yonhap |
By Lee Min-hyung
Minor cryptocurrency exchanges are feared to have to close down amid rapidly-cooling market sentiment here and abroad.
The five largest cryptocurrency exchanges in Korea ― Upbit, Bithumb, Coinone, Korbit and Gopax ― account for more than 99 percent of the market. According to data from the Korea Financial Intelligence Unit, a total of 26 crypto exchanges _ including the top five _ were in operation here as of the end of June.
But it remains questionable whether the minor exchanges will be able to survive this period of monetary tightening and falling crypto transactions.
Even the major exchanges' transaction volume has been on a steep decline this year. Data from the five exchanges showed that their combined crypto transactions stood at around $260 billion in the second quarter of this year, down by more than 77 percent from a year earlier.
The lukewarm performance is attributable to deteriorating asset market conditions here and abroad after the U.S. Federal Reserve started its aggressive set of rate hikes in March.
As most monetary authorities, including the Bank of Korea, are widely expected to maintain such a hawkish stance until the end of this year, the outlook remains murky whether crypto market investor sentiment will remain buoyant over the next few months.
Industry officials argue that it would be realistically tough for small exchanges to join the ranks of the major exchanges at a time when the market leader, Upbit, maintains a de facto monopoly here.
"The four major exchanges _ excluding Upbit _ are struggling to expand their market shares, but the reality looks tough at a time when the market has lost momentum for a robust rally for the time being," an industry source said. "For minor exchanges that cannot operate Korean-won-based crypto transaction services here, it will be much tougher to achieve sustainable growth."
Only the aforementioned five exchanges can now operate such services after signing contracts with commercial banks here. Those that have not clinched partnerships with local lenders cannot operate won-based crypto transaction services here at all.
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