What happened?
Once surpassed by Upbit, Bithumb has successfully achieved a significant market share recovery starting in 2024 through aggressive marketing strategies, particularly by significantly increasing marketing expenses and launching a 'zero transaction fee' promotion, maintaining a stable trading volume that accounts for a quarter of the South Korean market. Bithumb has achieved operational profit and is actively preparing for its listing on the South Korean stock market but currently has no intention to expand into international markets.
South Korea has a large cryptocurrency investor base (over a third of the total population), with trading volume even surpassing the traditional stock market, and investors have a strong preference for altcoins. However, the market is also highly concentrated due to strict regulations, leaving only Upbit and Bithumb as the two major domestic exchanges, while global exchanges mostly retreat due to compliance issues.
Lee Jae-myung, leader of South Korea's Democratic Party, proposed the issuance of stablecoins pegged to the Korean won to prevent capital outflow and strengthen financial sovereignty. This proposal has raised concerns among economists, who argue it could lead to an increase in the money supply and a transfer of monetary control. Despite the controversy, the Democratic Party has established a 'Digital Asset Committee' and is preparing to introduce a (Digital Asset Basic Law), indicating significant progress in South Korea's stablecoin regulation and digital asset policy.
The Comeback Road of Bithumb, the Korean Exchange
In this cryptocurrency-enthusiastic country of South Korea, the digital asset market is undergoing significant transformation. Once surpassed by its competitor Upbit, the cryptocurrency exchange Bithumb is making a strong return, reclaiming market share and preparing for its initial public offering (IPO). Meanwhile, discussions in South Korea's political arena regarding the issuance of stablecoins pegged to the Korean won highlight the unique position and challenges that South Korea faces in the digital asset field.
Once a leader in South Korean cryptocurrency trading, Bithumb's market share fell to single digits after setbacks like the 2018 hacking incident. However, since 2024, Bithumb has made a remarkable comeback.
According to Kaiko data, the exchange's trading volume has stabilized at about a quarter of the South Korean market, peaking at 36%.
Bithumb's recovery is mainly attributed to its aggressive market strategy, particularly its significantly increased marketing expenses. From 16 billion won in 2023, it skyrocketed to 192 billion won in 2024, successfully attracting a large number of traders through 'zero transaction fee' promotions.
This also allowed Bithumb to achieve an operating profit of 130.8 billion won in 2024, reversing its previous losses.
Bithumb is currently actively preparing for its listing on the South Korean stock market and has selected Samsung Securities as the lead 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 has a 'limited perspective' and is more concerned about its global status.
The Cryptocurrency Boom in South Korea and Its Unique Market Structure
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, holding assets worth approximately 104 trillion won (about $74.5 billion) as of December 2024.
Simon Seojoon Kim, CEO of Hashed Venture Capital, pointed out that South Korea is the second-largest cryptocurrency market by trading volume, following the United States. Unlike Western markets dominated by Bitcoin and Ethereum, South Korean retail investors show strong interest in altcoins (cryptocurrencies other than Bitcoin), making the Korean market attractive for new projects and tokens.
However, the structural limitations of South Korea's cryptocurrency market are also very evident. Strict regulations have forced many small players to exit, leaving Upbit and Bithumb as the only major domestic competitors. Coupled with concerns about South Korea's stringent compliance environment, global exchanges have mostly retreated.
The Controversy and Future Prospects of the Korean Won Stablecoin
As Bithumb makes a comeback, South Korean politicians are also turning their attention to reforming cryptocurrency policies. Lee Jae-myung, leader of the ruling Democratic Party, proposed a notable suggestion: creating 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 primarily rely on US dollar stablecoins (such as USDT and USDC). Reports indicate that from January to March of this year, South Korean cryptocurrency exchanges experienced asset outflows of up to 56.8 trillion won (approximately $40.8 billion), nearly half of which was related to stablecoins. Lee Jae-myung believes that establishing a stablecoin market pegged to the won would 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 like the National Pension Service to invest in cryptocurrencies after meeting price stability standards. He also suggested establishing an integrated monitoring system and reducing transaction fees to make cryptocurrencies more accessible under government oversight.
However, the stablecoin proposal has 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 transfer monetary control to private issuers. He believes, 'We must not overlook the economic principles behind it. 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 industry development, emphasizing the importance of addressing regulatory uncertainties, including the regulation of stablecoins. The party is also preparing to introduce a (Digital Asset Basic Law) to establish a legal framework for cryptocurrencies and stablecoins, requiring issuers to hold at least 50 billion won 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.
References: Cointelegraph, Bloomberg
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