According to an electronic announcement by the Korean Financial Supervisory Service (FSS), the annual profit of UPbit's parent company Dunamu fell 93% year-on-year to $ 7.4 million.
The significant decline in revenues of these two companies is mainly due to the significant decline in the demand for cryptocurrencies in the local crypto market over the past 24 months.
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Cryptocurrency transaction volume in South Korea drops sharply
At its peak in 2017 and 2018, Bithumb processed approximately 1.2 million BTC transactions per month, equivalent to $ 7.2 billion.
However, during peak price volatility in 2019 and 2020, Bithumb processed approximately 300,000 BTC transactions. This shows that from 2017 to 2018, its monthly Bitcoin transaction volume has dropped by 75%.
Similarly, the monthly bitcoin transaction volume of UPbit has also dropped from 1.35 million bitcoins in 2017 to around 250,000 bitcoins in 2020. Over the past two years, the average monthly transaction volume of UPbit has been 200,000 BTC.
Since the end of 2017, the price of bitcoin has been struggling to reach an all-time high of $ 20,000, while at the same time trading volume on all major cryptocurrency exchanges in the country, including Korbit, Coinone, and Gopax, has fallen by 60 -80%.
(UPbit monthly average Bitcoin transaction volume since the end of 2017)
Before the top crypto exchanges in South Korea's revenues fell sharply, the local market fell into a state of stagnation for two years, and UPbit and Bithumb also faced high-profile legal cases.
In December 2019, the State Tax Service of South Korea charged Bithumb $ 67 million in taxes for providing services to overseas users. UPbit was accused of falsifying the transaction volume, but the company firmly denied it.
The two exchanges also faced hacking attacks, and UPbit just suffered a $ 50 million hacking attack four months ago.
Can South Korean legislation save the currency market?
The Special Financial Information Law passed by the South Korean Parliament is believed to legalize the local crypto exchange market.
Whether the bill is sufficient to revive South Korea's interest in cryptocurrencies in the short to medium term is still uncertain. Until the legislation is passed, there will be no major obstacle for local investors to trade cryptocurrencies as the country's top exchanges receive contracts with mainstream financial institutions.