Concerns over Worsen Speculation Frenzy: China’s OKCoin to Make Debut in S. Korea, Provoking 2nd Round of War with Exchanges | BusinessKorea

Sunday, February 25, 2018

OKCoin, the fourth largest cryptocurrency exchange in the world, is reportedly moving to launch in South Korea.
OKCoin, the fourth largest cryptocurrency exchange in the world, is reportedly moving to launch in South Korea.
Seoul, Korea
22 January 2018 - 8:45am
Yoon Yung Sil

Although the government is even considering the shutdown of cryptocurrency exchanges on fears about an overheating in cryptocurrency speculation, OKCoin, the fourth largest cryptocurrency exchange in the world, is reportedly moving to launch in South Korea. Accordingly, the competition between exchanges is expected to be overheated further as well. In particular, there are growing concerns that the speculation frenzy can become worse when exchanges competitively attract customers, leading to tighter regulations by the government.

According to investment banking (IB) industry sources on January 21, the upheaval in the cryptocurrency exchange market is forecast to come about as China’s OKCoin will be launched in South Korea next month and Bithumb and Coinone, the second and third largest exchanges in the nation, are to open their new transaction systems and to release their mobile applications.

OKCoin, once China’s biggest digital currency exchange since the launch in 2013, will commence business of “OKCoin Korea” in February when South Korea starts running the real-name system for cryptocurrency accounts. The company had to shutter its local exchange operations last year, following Chinese regulators' crackdown on cryptocurrency exchanges. After that, it moved its server to another country and currently ranks fourth in the world in terms of virtual currency transactions alone.

OKCoin Korea aims to offer about 60 digital currencies to be traded against the Korean won. It is nearly twice as many as Upbit’s. As Upbit brought in new digital currencies through its partnership with US-based Bittrex, the world's seventh-largest Bitcoin exchange, in August last year, it jumped to No.1 in the world within months with investors piling into the exchange. Considering the fact, the launch of OKCoin Korea is also forecast to have significant consequences.

According to Coinhills, the combined share of six South Korean exchanges in global cryptocurrency transactions reaches 34 percent, including 17.39 percent of Upbit and 13.54 percent of Bithumb. An official from an exchange said, “Investors who are using small and mid-size exchanges in order to invest in virtual currencies that are not traded in large exchanges, such as tron, storm and dent, say that they will immediately move to OKCoin when it opens. Unlike domestic exchanges whose servers often go down when a mass amount of people try to log on, OKCoin has a very stable system so it is remarkably competitive in the market.”

Benchmarking Upbit that attracted customers with its convenient trading system and mobile app, South Korea’s second and third largest exchanges are also seeking to improve usability. According to the data from WiseApp, Upbit users accounted for 65 percent, or 1.28 million, of the total 1.96 million users of virtual currency apps from January 8 to 14. Accordingly, Bithumb is now developing its new cryptocurrency trading system “Bithumb Pro” with improved user convenience. Coinone has also been operating a beta version since the launch before the release of its first mobile app.

An official from the IB industry said, “Since cryptocurrency exchanges were small in size until early last year, they weren’t able to meet their customers’ demands caused by the fast-growing market. When exchanges introduce the real-name verification system and new customers can deposit money in their accounts, they have to go back to square one for competition.”

However, some market watchers point out that the government, which is even considering the closedown of exchanges to calm the speculation frenzy, can strengthen regulations on digital currency exchanges when the number of market participants and the volume of transactions surge due to the competition between exchanges to attract customers. 

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