Losing on Home Turf to Chinese Exchanges
Chinese cryptocurrency exchanges, which rank 1st to 3rd in the global virtual currency exchange rankings, are actively advancing into the Korean market.
Following Huobi Korea's official declaration that it will open a market where virtual currencies can be traded in Korean won by the end of this year, OKEx announced on Dec. 3 its advance into the Korean market. Binance has hired an official in charge of the Korean market and has been expanding contact with the Korean community.
Although Chinese exchanges are speeding up their efforts to tap into Korea, domestic exchanges are helpless. The Korean government has failed to come up with any guidelines or policies related to cryptocurrency exchanges, adding to the confusion. Concerns are growing that Korea could lose its home market to Chinese exchanges.
OKEx held a media conference at the Grand Hyatt Hotel in Seoul on Dec. 3 and announced that it will soon launch OKCoin, its virtual currency exchange which is in beta service.
OKCoin Korea CEO Choi Jeong-hwan said, "OKCoin attracted about 300,000 users during the advance subscriptions held in April prior to the launch of the beta service. We have also attracted investment from NHN Entertainment, one of Korea’s leading IT companies.”
He said the ongoing beta service will soon be converted into an official service, which will be based on a user interface and user experience that is tailored to the preferences of Korean customers.
Prior to this, Huobi Korea officially announced that it would open a won market sometime this month. Currently, Huobi Korea, which operates a market where transactions can be made only with Bitcoin or Ethereum, plans to operate a market by year's end where users can trade virtual currencies with their won deposits. It is also planning to hold a free fee event to celebrate it.
In particular, Huobi Korea announced that it would not introduce a trading method based on “honeycomb accounts,” which refer to an exchange’s existing corporate accounts where users deposit their money to trade virtual currencies as Korean banks refuse to issue new real-name accounts to exchanges. The Chinese exchange may be seeking to persuade Korean banks to issue new real-name accounts to it. "Because we are still in talks with our partners, it is difficult to disclose how we will operate the exchange." said a Huobi Korea official.
Binance is also seeking to advance into the Korean market. The company invested in blockchain project “Terra,” which is led by Shin Hyun-sung, chairman of Timon board of directors, through its investment company, Binance Labs.
Although these leading Chinese exchanges are moving fast to tap into the Korean market, Korean exchanges are showing few signs of making any moves. Although the real-name virtual currency trading system started in January, commercial banks have not issued new real-name accounts to exchanges, expressing concerns over money laundering.
It is also not easy for Korean exchanges to send money abroad to expand into overseas markets due to concerns about money laundering. Dunamu, which operates Korea’s representative exchange Upbit, has been trying to send money abroad to set up an overseas subsidiary, only in vain.
An industry source said, "While Korean exchanges are waiting for the Korean government to come up with a policy on virtual currency trading and overseas expansion, Chinese exchanges are rapidly penetrating the Korean market."