What Happened?
Once surpassed by Upbit, Bithumb has successfully achieved a significant recovery in market share starting from 2024 through aggressive marketing strategies, especially by greatly increasing marketing expenditures and launching a “zero fee” promotion, stabilizing its trading volume to account for a quarter of the South Korean market. Bithumb has achieved operational profit and is actively preparing for an initial public offering (IPO) in the South Korean stock market, though it currently has no intention of expanding into international markets.
South Korea has a large group of cryptocurrency investors (over a third of the total population), with trading volumes even surpassing those of traditional stock markets, and investors have a strong preference for altcoins. However, the market is also highly concentrated due to strict regulations, with only Upbit and Bithumb remaining as the two major domestic exchanges, while global exchanges mostly withdraw due to compliance issues.
Lee Jae-myung, leader of the Democratic Party of Korea, proposed the issuance of a stablecoin pegged to the Korean won to prevent capital outflow and strengthen financial sovereignty. This proposal has raised concerns among economists, who believe it may lead to an increase in the money supply and a shift in currency control. Despite the controversy, the Democratic Party has established a “Digital Asset Committee” and is preparing to introduce the “Digital Asset Basic Law,” indicating significant advancements in South Korea’s regulation of stablecoins and digital asset policies.
Bithumb’s Comeback Journey
In South Korea, a country passionate about cryptocurrency, the digital asset market is undergoing significant transformation. Bithumb, a cryptocurrency exchange that was once surpassed by its competitor Upbit, is making a strong comeback, regaining market share and preparing for its IPO. Meanwhile, discussions in South Korean politics about issuing a stablecoin pegged to the Korean won highlight the unique position and challenges faced by South Korea in the digital asset realm.
Once the leader in South Korea’s cryptocurrency trading, Bithumb saw its market share drop to single digits after setbacks like the 2018 hacking incident. However, since 2024, Bithumb has embarked on a remarkable comeback. According to Kaiko data, the exchange’s trading volume has stabilized to account for about a quarter of the South Korean market, peaking at 36% at times.
Bithumb’s revival is mainly attributed to its proactive market strategies, particularly its significantly increased marketing expenditures. From 16 billion KRW in 2023, it surged to 192 billion KRW in 2024, successfully attracting a large number of traders through promotional measures such as “zero fee” trading.
This has allowed Bithumb to achieve an operational profit of 130.8 billion KRW in 2024, reversing its previous losses. Bithumb is currently actively preparing for an IPO in the South Korean stock market, having selected Samsung Securities as its main underwriter, aiming to complete the listing by the end of 2025.
Although Bithumb plans to expand its staking functions and list new tokens, it currently has no intention of expanding into international markets, mainly due to regulatory and security concerns. This contrasts with its main competitor Upbit, which believes that focusing solely on the South Korean market offers a “limited perspective” and is more concerned about its global status.
The Cryptocurrency Frenzy and Unique Market Structure in South Korea
South Korea is one of the most enthusiastic countries in the global cryptocurrency market. Currently, there are over 18 million digital asset investors in Korea, accounting for about a third of the total population, with assets valued at approximately 104 trillion KRW (about 74.5 billion USD) as of December 2024.
Simon Seojoon Kim, CEO of Hashed Venture Capital, points out that South Korea is the second-largest cryptocurrency market by trading volume in fiat currency, only behind the United States. Unlike the Western markets, which are dominated by Bitcoin and Ethereum, South Korean retail investors show a strong interest in altcoins (cryptocurrencies other than Bitcoin), making the Korean market attractive for new projects and tokens.
However, the structural limitations of the South Korean cryptocurrency market are also evident. Strict regulations have forced many small players out of the market, leaving Upbit and Bithumb as the only major domestic competitors. Coupled with concerns over South Korea’s strict compliance environment, most global exchanges have also retreated.
The Controversy and Future Outlook of the Korean Won Stablecoin
As Bithumb revitalizes, South Korean politicians are also turning their attention to reforms in cryptocurrency policies. Lee Jae-myung, leader of the ruling Democratic Party of Korea, has proposed a noteworthy suggestion: to create a stablecoin pegged to the Korean won to prevent capital outflow and strengthen national financial sovereignty.
Currently, South Korean law prohibits the issuance of domestic stablecoins, leading local exchanges to rely mainly on USD-pegged stablecoins (such as USDT and USDC). Reports indicate that from January to March this year, South Korean cryptocurrency exchanges experienced asset outflows of up to 56.8 trillion KRW (about 40.8 billion USD), nearly half of which was related to stablecoins. Lee Jae-myung believes that establishing a stablecoin market pegged to the Korean won will help prevent the outflow of national wealth.
Lee Jae-myung’s proposal is part of his digital asset strategy, which includes legalizing cryptocurrency spot ETFs and allowing institutional investors, such as the National Pension Service, to invest in cryptocurrencies after meeting price stability criteria. He also suggested establishing an integrated monitoring system and reducing trading fees to make cryptocurrencies more accessible under government oversight.
However, the stablecoin proposal has also raised concerns among economists. Shin Bo-sung, a senior researcher at the Korea Capital Market Institute, warned that stablecoins could lead to an increase in the money supply and shift currency control to private issuers. He stated, “We must not ignore the economic principles behind this. Stablecoins are essentially another form of banking, creating money out of thin air.”
Despite the controversy, the Democratic Party established a “Digital Asset Committee” on May 13, dedicated to formulating cryptocurrency policies and promoting industrial development, emphasizing the importance of addressing regulatory uncertainties, including stablecoin regulation. The party is also preparing to introduce the “Digital Asset Basic Law,” which will establish a legal framework for cryptocurrencies and stablecoins, requiring issuers to hold at least 50 billion KRW in reserves and obtain approval from the Financial Services Commission.
As policies gradually improve, South Korea’s role in the global cryptocurrency landscape will continue to evolve.
Reference: cointelegraph, bloomberg