Why is the Largest Korean Crypto Exchange, Dunamu, likely to face stricter regulations?

Authorities in Korea could limit the parent company of the crypto exchange giant in Korea, Upbit, for various operations

Reports are that several tougher regulations could be imposed on Dunama by the Korea Fair Trade Commission (KFTC). Drama, the parent company of Korea’s largest crypto exchange, Upbit, has been classified by KFTC as a large enterprise tag. Korean authorities considered the firms with over five trillion won, about $4.03 billion, worth of assets under more strict regulatory scrutiny that would require it to reveal information on major dealing of the company internally, board decisions, and shareholders. 

Overall, Dunamu had about 10.15 trillion won, that is, $8.19 billion worth of dollars under its asset management according to 2021. This huge amount is slightly above the threshold of 10 trillion that exempts businesses where they could be categorized as institutions that are subject to mutual investment limitations. 

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Apart from being barred from operating or conducting mutual investments, the crypto giant will have to face other restrictions related to debt guarantees, cross-shareholdings, etc. With only about 1.38 trillion won worth of assets under its management since 2020, the rapid growth of Dunaum attracted attention last year from the watchdogs of Korea. 

The authorities have compelled companies with more than five trillion won in their assets to disclose the information on major dealings internally in the company, shareholders, and the board decisions under Monopoly Regulation and Fair Trade Act. 

According to the sources quoted by Korea Herald, the KFTC is liable to regulate the Upbit parent company as a nonfinancial business and consider the crypto exchange customer deposits as its assets. These circumstances would make Dunamu expectedly face some severe regulation since the colossal size of assets it manages. 

Upbit accounts for about 78% market share in South Korea, and Dumanu posted its net income of about 2.2 trillion won last year. This positioned the company among one of the most attention-grabbing unicorns in the country’s crypto space. President-elect of South Korea, Yoon Suk-yeol, has openly shown his support for the crypto industry. During the camping in his public appearance, he said that those who were involved in generating a profit of about less than $40,000 per year from trading crypto would be relieved from tax payments. 

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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