Author: Zen, PANews

On July 24th last year, the trading volume of South Korea's five major cryptocurrency exchanges (Upbit, Bithumb, Coinone, Korbit, and Gopax) reached 16.919 trillion won, exceeding the KOSPI (Korea Composite Index) of 15.007 trillion won on the same day. However, the two markets subsequently experienced completely different development trajectories.

The gap between them widened rapidly as KOSPI's trading volume surged from the end of last year and the crypto market continued to decline. As of the end of May, KOSPI's daily trading volume was 118.267 trillion won, while the 24-hour trading volume of the five major crypto exchanges was only 2.713 trillion won, the latter being only 2.03% of the size of the South Korean stock market. In the current AI boom, South Korean retail investors seem to have lost interest in cryptocurrency trading; Samsung and SK Hynix are the more popular choices.

However, unlike retail investors who are withdrawing funds from the secondary crypto market, institutional investors are not leaving the crypto industry. Instead, they are betting on exchange equity and compliance licenses. Large South Korean financial groups, securities firms, technology companies, and overseas crypto institutions have begun a flurry of acquisitions of crypto exchange equity.

Compliance access has become a scarce asset, and the competition for exchange equity has entered a period of intense competition.

In South Korea, where regulations are stringent, the barriers to entry for cryptocurrency exchanges are not low. In terms of licenses, accounts, compliance systems, and future business access, cryptocurrency exchanges are actually one of the scarcest pieces of infrastructure in South Korea's digital financial system. To truly achieve scale, not only are virtual asset service provider qualifications required, but also anti-money laundering systems and the ability to deposit and withdraw Korean won connected to banks' real-name account system.

If South Korea's digital asset regulatory framework is gradually implemented, the role of compliant exchanges may extend beyond simple spot trading platforms to become crucial entry points for stablecoin circulation, RWA trading, STO-related services, custody partnerships, and institutional digital asset business. Institutions entering the equity structure of exchanges at this time are not merely betting on current transaction fees, but rather on the potential value of these compliant entry points in the next phase of the digital finance market.

The acquisition of Coinone's equity stake is a prime example. At the end of May, Korea Investment & Securities and OKX jointly signed an agreement to acquire nearly 20% of the shares of the South Korean cryptocurrency exchange Coinone, becoming its third-largest shareholder. The acquisition was primarily conducted through a new share issuance, and the existing major shareholders' management control remained unchanged.

(From left to right) Kim Sung-hwan, CEO of Korea Investment & Securities; Netero Dai, Global Head of Markets at OKX; Cha Myung-hoon, CEO of Coinone; and Jung Cheol-ho, CEO of Com2uS Holdings, pose for a group photo after a strategic investment signing ceremony at Coinone headquarters.

The significance of this deal lies not in Coinone's current trading volume, but in the fact that the combination of a traditional brokerage firm and a global exchange is entering the South Korean market . Through this acquisition, HanTo Securities will advance its digital asset business, including token issuance and circulation, attracting corporate clients, and large-scale brokerage. For Coinone, introducing a local securities firm and a global crypto institution can improve its capital structure, enhance business synergy, and potentially lay the foundation for future institutional clients, cross-border liquidity, and new product expansion.

Compared to Coinone, the battle for control of Dunamu, the operator of Upbit, South Korea's largest cryptocurrency exchange, better illustrates the value of leading entry points. Recently, major financial and technology institutions such as Hana Bank, Hanwha Investment & Securities, Samsung Securities, and Samsung SDS have successively invested in or increased their stakes in Dunamu.

Among these deals, Hana Bank will invest approximately 1.0033 trillion won to acquire a 6.55% stake in Dunamu, while Hanwha Investment & Securities plans to increase its stake from 5.94% to 9.84%. Samsung Securities, Samsung SDS, and Samsung Card will collectively acquire a 4% stake in Dunamu. Behind these flurry of transactions, Upbit has become not only South Korea's largest cryptocurrency exchange but also a crucial entry point for traditional financial institutions into the digital asset market.

Beyond the leading players, Flybit demonstrates that smaller exchanges also possess licensing and compliance value. WeHub, the holding company of Busan digital asset exchange Bdan's largest shareholder, is acquiring shares in Flybit's operator. Upon completion of the transaction, WeHub will hold 40%, WeHub's major shareholder Yang Jae-suk will hold 25%, and Flybit, represented by Kim Seok-jin, will hold 15%. While Flybit previously lacked verified accounts in Korean won, this transaction allows Bdan to expand from tokenized trading of physical assets like gold and silver to stablecoin and cryptocurrency trading.

Betting on the next generation of digital finance

The three equity acquisition cases mentioned above demonstrate that institutional buying of South Korean cryptocurrency exchanges should not be interpreted as institutional bullishness on a short-term market trend, but rather as an early positioning for the next generation of digital financial infrastructure. Specifically, three main themes are currently emerging.

First is the South Korean won stablecoin. Discussions surrounding the stablecoin system in South Korea are ongoing, but key disagreements remain unresolved. Discussions on South Korea's Basic Law on Digital Assets were originally planned with high hopes, but disagreements persist regarding the issuer of the won stablecoin, reserve accumulation methods, redemption obligations, and restrictions on major shareholders' holdings in exchanges. The relevant bill has not yet entered substantive review.

Once stablecoins are institutionalized, the importance of exchanges will change. In the past, exchanges primarily served as venues for retail investors to buy and sell coins; in the future, exchanges may become crucial nodes for stablecoin issuance, exchange, custody, circulation, and compliance monitoring. Especially in markets like South Korea, where the banking system is deeply intertwined with exchanges, whoever controls the inflow and outflow of Korean won will be closer to the core liquidity of stablecoins and on-chain payments.

Secondly, there's RWA and tokenized securities. South Korea has been discussing the tokenization of physical assets, security tokens, and blockchain financial infrastructure in recent years. The combination of Bdan and Flybit is a microcosm of this direction: on one end, there's the tokenization and trading of physical assets like gold and silver; on the other end, there are existing cryptocurrency exchange licenses and systems. For traditional financial institutions, exchange equity may also become a prerequisite for participating in the issuance, distribution, clearing, and secondary trading of tokenized securities in the future.

Thirdly, there are digital asset services for enterprises and institutions. South Korean exchanges have historically primarily served individual investors, but as regulations gradually loosen restrictions on corporate accounts, institutional custody, compliant trading, and digital asset investment products, their customer base may shift from being dominated by retail investors to involving institutional participation. For exchanges, this means their revenue structure can expand from single transaction fees to include custody, settlement, market making, asset issuance, investment products, and technical services. For traditional financial institutions, holding shares in an exchange in advance is tantamount to securing a foothold in the future compliant digital asset market.

Long-term bets in a depressed crypto market

However, the influx of institutional investors does not necessarily mean that the South Korean crypto industry will immediately re-enter an upward cycle. Over the past year, the South Korean market's investment preferences have clearly shifted from the retail-driven crypto trading boom to a return to the stock market as the primary battleground for capital and sentiment-based trading .

Due to restrictions on corporate and institutional participation, foreign investment, real-name account systems, and regulatory constraints, South Korean exchanges still rely more heavily on domestic individual investors. Their business flexibility cannot be compared to that of overseas exchanges, which diversify their revenue streams through institutional services, custody, stablecoins, derivatives, payments, and asset management.

In terms of revenue structure, South Korean cryptocurrency exchanges are highly dependent on transaction fees . Dunamu's transaction fee revenue in the first quarter was 228.7 billion won, accounting for 97.49% of its total revenue; Bithumb's transaction fee revenue accounted for nearly 99.99%. This means that in this cryptocurrency market "winter," South Korean exchanges have been more severely impacted than overseas platforms . Dunamu's consolidated revenue in the first quarter of this year was 234.6 billion won, a decrease of 54.6% compared to the same period last year; Bithumb's revenue during the same period decreased from 194.7 billion won to 82.5 billion won, a decrease of 57.6%.

Beyond the inherent fragility of business operations, South Korea also faces regulatory uncertainties. The basic law on digital assets remains in flux, rules regarding stablecoin issuers and reserve requirements are not yet fully clarified, and restrictions on major shareholders' holdings in exchanges could potentially impact existing equity structures. Whether South Korean market interest in crypto assets can recover depends on global market conditions, regulatory implementation, product innovation, and changes in domestic risk appetite.

Regardless, the exodus of retail investors has put pressure on the short-term performance of exchanges, and to some extent, it has also created an opportunity for a reshuffling of equity prices, shareholder structures, and strategic resources. Therefore, this round of "bottom-fishing" by South Korean institutions is not simply about the bottom of cryptocurrency prices, but rather the bottom of the cycle for exchanges as digital financial infrastructure .

When the market is at its quietest, retail investors see a shift in narrative and the disappearance of the wealth effect. Institutions, on the other hand, see it as a potential entry point for the next wave of stablecoins, RWAs, tokenized securities, and institutional digital asset services.

The battle for control of South Korean cryptocurrency exchanges began amidst this contrast.

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