[News in focus] Upbit expands into Singapore

As progress on Korea’s cryptocurrency policies remains sluggish, Upbit, a major local cryptocurrency exchange, will launch another exchange for global investors in Singapore in early October, the exchange’s operator, Dunamu, announced on Thursday.

Dunamu, owned by Korean IT company Kakao, cited the Monetary Authority of Singapore’s (MAS) strong vision for establishing a blockchain hub and the country’s active support for relevant industries as the reason for launching the exchange there. The MAS serves as Signapore’s central bank and financial regulator.

“Singapore has openly embraced blockchain technology and related businesses, so we believe operating an exchange here will naturally lead to great opportunities for us to pursue other projects in the blockchain sphere,” said Alex Kim, the CEO of Dunamu’s Singapore operation. “It will also provide us with a strong starting point in diversifying our business and becoming more competitive globally.”

The company said the exchange’s advantages include its ability to trade the latest crypto-assets from U.S.-based exchange Bittrex, real-time security monitoring, a firewall system for enhanced security and user-friendly mobile apps.

Riding the cryptocurrency investing boom in Korea, Upbit, one of the oldest local cryptocurrency trading platforms, overtook Binance, currently the world’s largest exchange, in terms of trading volume in January. But the Korean exchange, launched in October of last year, retreated to as low as 11th in terms of adjusted daily trading volume as of Thursday, according to CoinMarketCap.

Due to the overheated nationwide interest in cryptocurrencies and a series of hacks and scams involving the virtual currencies, the Korea Financial Services Commission, the country’s top financial regulator, announced a real name requirement for cryptocurrency trading and banned initial coin offerings a year ago.

After going as far as threatening to ban any cryptocurrency trading, the government still hasn’t figured out how to regulate the digital currencies.

In the meantime, the local cryptocurrency trading market has gradually shrunk to those who already had virtual currency accounts before the government crackdown. Market insiders and experts have criticized the government’s approach, saying that cryptocurrencies are organically related to the blockchain ecosystem and blocking the former will inevitably hurt the latter.

Dunamu CEO Lee Sir-goo said Upbit’s global expansion came at the right time.

“One of the key functions of a crypto-asset exchange is to connect the real economy to cryptocurrencies, and we believe that we can provide this bridge between Korea and the global market.” Lee said. “We hope the blockchain regulatory guidelines will be established soon in Korea.”

Kakao is not alone among Korean tech companies running a cryptocurrency exchange in Singapore. Back in July, Japan’s Line Corporation, which is owned by Naver, began operating Bitbox in Singapore. At the end of last August, the Naver subsidiary announced it would launch its own cryptocurrency to attract more users.

Singapore, a historically friendly country to capital, has become a hub for cryptocurrency and blockchain-based businesses in the past couple of years. The momentum gathered steam after the crackdown in China on cryptocurrency trading and initial coin offerings, which is a type of crowdsourced fundraising that uses cryptocurrencies. Digital currency exchanges are not officially recognized by the Singaporean central bank as monetary exchanges, but they can operate within regulatory requirements.

Global players are migrating to Singapore as well. Binance opened in Singapore on Tuesday in beta, allowing invite-only users in a closed environment.

BY SEO JI-EUN [seo.jieun@joongang.co.kr]