Korea’s Largest Crypto Exchange Could Face Stricter Regulations: Report

The Korea Fair Trade Commission (KFTC) is reportedly ready to impose tougher regulations on Dunama – the parent company of the country’s largest crypto exchange, Upbit – by classifying it as a “large enterprise.” The authority deems firms with more than 5 trillion won ($4.03 billion) assets subject to stricter regulatory scrutiny, requiring them to “disclose information on major intracompany dealings, board decisions, and shareholders.”

• Dunamu held 10.15 trillion won (US$8.19 billion) as its assets in 2021, slightly above the 10-trillion threshold that exempts businesses from being categorized as “companies subject to limitations on mutual investment.”
• Besides being barred from conducting mutual investment, the giant will face other restrictions on debt guarantees, cross-shareholding, etc.
• With only 1.38 trillion won of assets under its management as of 2020, Dunaum’s rapid growth last year attracted attention from the Korean watchdogs.
• The authorities obligated companies with over 5 trillion won (about US$4 billion) in assets to disclose information on major intracompany dealings, board decisions, and shareholders under the Monopoly Regulation and Fair Trade Act.
• According to sources acquired by the Korea Herald, the KFTC is prone to regulate Dunamu as a “non-financial business” and consider Upbit’s customer deposits as part of its assets. Under this circumstance,  Dunamu will expectedly face austere regulations due to the colossal size of its managed assets.
• With Upbit accounting for 78% of the market share in South Korea, Dunamu posted a net income of 2.2 trillion won in 2021, positioning the company as one of the most attention-grabbing crypto unicorns in the country.
• South Korea’s president-elect Yoon Suk-yeol has openly voiced support for the crypto industry. In a public appearance during the campaign, the former prosecutor said that those who generate profits of less than $40,000 per year from crypto trading would be exempt from paying taxes.
• It was seen as the new president’s friendly gesture towards the industry as he had previously pleaded to ease regulations on cryptocurrencies.