Institutions acquire Upbit and Coinone stakes as South Korean crypto volume drops to 2.713 trillion won

A stark divergence has emerged between retail sentiment and institutional strategy within the South Korean digital asset sector. On July 24 of the previous year, the combined trading volume of the nation's five major exchanges—Upbit, Bithumb, Coinone, Korbit, and Gopax—reached 16.919 trillion won, surpassing the 15.007 trillion won traded on the KOSPI that same day.

However, the trajectories of these two markets have since decoupled completely. While KOSPI volumes surged by year-end, crypto activity contracted sharply. By the end of May, daily KOSPI trading hit 118.267 trillion won, whereas the 24-hour volume across the five major crypto exchanges plummeted to just 2.713 trillion won, representing only 2.03% of the stock market's activity. In the current AI-driven boom, retail capital has largely migrated toward equities like Samsung and Hynix, abandoning the secondary crypto market. Conversely, institutions are aggressively acquiring exchange equity and compliance licenses, viewing them as critical infrastructure for the next phase of digital finance.

The scarcity of compliant exchange licenses in South Korea's strict regulatory environment drives this institutional fervor. Operating virtual asset services requires not only specific qualifications but also robust anti-money laundering systems and integration with bank real-name account systems for Korean won deposits. Woofun AI notes that compliant exchanges are poised to evolve from simple spot trading venues into essential gateways for stablecoin circulation, RWA transactions, and institutional custody. Consequently, institutional investors are betting on the long-term value of these regulatory entry points rather than immediate transaction fee yields. A prime example is the acquisition of Coinone shares at the end of May, where South Korean Investment & Securities and OKX jointly agreed to purchase approximately 20% each of the exchange's equity. This deal, executed largely through new share issuance, positions both entities as the third-largest shareholders while existing major shareholders retain control.

The strategic significance of the Coinone transaction lies in the synergy between a traditional securities firm and a global exchange, facilitating entry into the South Korean market. Through this partnership, South Korean Investment & Securities aims to advance digital asset services including the issuance of tokenized securities and block trading. For Coinone, the influx of capital from local securities firms and global crypto organizations like OKX enhances its capital structure and lays the groundwork for cross-border liquidity and product expansion. Data compiled by Woofun AI indicates that such alliances are designed to bridge the gap between traditional finance and emerging digital asset protocols, preparing for a future where exchanges serve as nodes for institutional-grade financial products.

Competition for control of Upbit, the country's largest exchange, further underscores the premium placed on top-tier market access. Major financial and technology conglomerates, including Hana Bank, Hanwha Investment & Securities, Samsung Securities, and Samsung SDS, have recently increased their holdings in Dunamu, Upbit's operator. Hana Bank is set to invest approximately 1.0033 trillion won to acquire a 6.55% stake, while Hanwha Investment & Securities plans to raise its holding from 5.94% to 9.84%.

Additionally, Samsung Securities, Samsung SDS, and Samsung Card will collectively acquire 4% of Dunamu's shares. These moves transform Upbit from a retail trading platform into a critical conduit for traditional financial institutions entering the digital asset space.

Even smaller exchanges demonstrate significant licensing value, as evidenced by the Flybit acquisition. WeHub, the holding company for Busan Digital Asset Exchange Bdan, is acquiring shares in Flybit's operator. Upon completion, WeHub will hold 40% of the shares, with major shareholder Yang Jae-sik holding 25% and Flybit representative Kim Sik-jin retaining 15%. Although Flybit previously lacked the capability to handle Korean won real-name accounts, this transaction enables Bdan to expand from physical asset tokenization into stablecoin and crypto asset trading. Woofun AI analysis suggests that these equity shifts signal a broader industry trend where institutions secure positions in the next generation of digital finance infrastructure rather than speculating on short-term market cycles.

Three primary trends are shaping this institutional pivot: Korean won stablecoins, RWA tokenization, and enterprise digital asset services. Discussions on stablecoin regulation under the Digital Asset Basic Act remain ongoing, with unresolved issues regarding issuance entities, reserve accumulation, and redemption obligations. Once institutionalized, exchanges will likely become crucial nodes for stablecoin issuance and compliance monitoring. In a market where bank accounts are tightly integrated with exchanges, controlling access to Korean won deposits grants proximity to core liquidity.

Furthermore, the combination of Bdan and Flybit highlights the potential for exchanges to facilitate the issuance and trading of tokenized securities, offering traditional financial institutions a pathway into RWA markets.

Despite this institutional activity, the South Korean crypto industry faces structural vulnerabilities. Exchanges remain heavily reliant on retail investors due to restrictions on corporate participation and foreign investment. Revenue models lack the flexibility of overseas counterparts, which diversify income through derivatives, custody, and asset management. In the first quarter of this year, Dunamu's transaction fee revenue totaled 228.7 billion won, accounting for 97.49% of its total revenue, while Bithumb's reliance on fees reached nearly 99.99%. Consequently, Dunamu's consolidated revenue fell 54.6% year-over-year to 234.6 billion won, and Bithumb's revenue dropped 57.6% to 82.5 billion won. Regulatory uncertainty regarding the Digital Asset Basic Act and shareholder restrictions adds further complexity to the landscape.

The departure of retail investors has created a cyclical bottom for exchange valuations, presenting a unique opportunity for strategic reconfiguration. Institutions are not merely bidding up cryptocurrency prices but are securing equity in the foundational infrastructure of the digital finance ecosystem. As the market remains quiet, the focus shifts from short-term trading volume to long-term positioning in stablecoin, RWA, and institutional services. The battle for control of South Korean crypto exchanges is thus a strategic maneuver to capture value in the next phase of digital asset evolution, driven by the convergence of traditional finance and blockchain technology.