Upbit's Fee War Fails: Stablecoin Share Loss Signals Deeper Structural Crisis

Woofun AI reports that Upbit has launched an urgent counterattack to reclaim its eroding stablecoin market share, a strategic pivot analyzed by c4lvin and edited by Chopper for Foresight News. The exchange's aggressive push into the stablecoin sector is not merely a promotional tactic but a response to a fundamental restructuring of the South Korean crypto landscape, where traditional dominance is being challenged by fee-driven competition and shifting capital flows. This analysis dissects the logic behind Upbit's focus on stablecoins by examining three critical dimensions: the evolving market share dynamics among local exchanges, the role of stablecoins in cross-border capital outflows, and the impending regulatory changes that threaten to reshape the industry's competitive baseline.

To stem the tide of user migration, Upbit initiated a promotional campaign running from July 26 to August 9, offering a 0.05% fee waiver on trades within its Korean won stablecoin trading market. In a synchronized move, the platform rapidly expanded its asset offerings by listing dollar-pegged stablecoins such as RLUSD and USDG. These measures were explicitly designed to boost trading volume and reassert Upbit's relevance in a segment where it had previously held a commanding lead. While Upbit has introduced stablecoins before, this instance marks the first time the platform has deployed multiple stablecoin-related services in such a condensed timeframe, signaling a heightened sense of urgency. The strategy reflects an attempt to leverage liquidity and fee incentives to retain users who are increasingly sensitive to transaction costs in a homogeneous asset class.

The historical context of this shift reveals a dramatic transformation in the South Korean exchange market between 2025 and 2026. In January 2025, the stablecoin market was a duopoly dominated by Upbit, which held a 53.5% share, and Bithumb, with 42.5%, together accounting for over 95% of the market. Just 18 months later, this landscape had fractured into a tripartite competition. By June 2026, Coinone had emerged as the leader, recording an average daily stablecoin trading volume of 84.58 billion Korean won, representing a 34.8% market share. Bithumb followed with 75.57 billion Korean won (31.1%), while Upbit trailed with 73.02 billion Korean won, capturing only 30.1% of the market. This redistribution of power underscores how quickly market leadership can shift when competitive advantages are undermined by aggressive pricing strategies from rivals.

The primary catalyst for this upheaval was Coinone's decision to implement a permanent zero-fee policy for USDC transactions starting in October 2025. At the time, competitors maintained fees ranging from 0.04% to 0.20%, creating a significant cost disparity that attracted fee-sensitive traders. Consequently, Coinone's market share surged from 11.5% in March 2025 to 30.5% by December, surpassing Upbit's 29.7% for the first time. This migration was driven by two main user behaviors: utilizing funds for overseas derivatives trading and capitalizing on currency exchange rate fluctuations. The data demonstrates that stablecoin demand exhibits high price elasticity; because stablecoins are functionally identical across platforms, users frequently transfer them to external wallets after purchase. Thus, fees and liquidity become the decisive factors, with even a 0.05 percentage point difference capable of altering industry rankings.

Notably, this reshuffle was confined to the stablecoin sector, leaving Upbit's broader market dominance intact. In June 2026, Upbit retained a 60.0% share of all cryptocurrency transactions, while Bithumb held 32.0%, and Coinone accounted for a mere 6.2%. This contrast highlights that stablecoins represent Upbit's weakest segment within an otherwise dominant portfolio. Compounding this issue is a rapid contraction in overall market size.

In July 2026, the average daily total trading volume of stablecoins across South Korea's five major exchanges fell to 466.69 million USD, a stark decline from 2.37 billion USD in January, representing an 80.3% drop. Dunamu, Upbit's parent company, reported a first-quarter 2026 revenue of 234.6 billion Korean won, down 55% year-on-year, with operating profits plummeting 78% to 88 billion Korean won. The market shrank to one-fifth of its original size in just six months, elevating the strategic value of resilient, non-cyclical sectors like stablecoins.

Woofun AI data shows, A more critical variable is the role of stablecoins as the core medium for cross-border capital flows in South Korea. In June 2026 alone, 2.7625 trillion Korean won worth of stablecoins were withdrawn from the five major exchanges to overseas platforms, while 2.2022 trillion Korean won flowed back, resulting in a net outflow of 560.3 billion Korean won. Since records began in January 2025, there has been a net outflow every month for 18 consecutive months, with cumulative net outflows reaching approximately 14.

9 trillion Korean won. This trend contrasts sharply with the stock market; in the second quarter of 2026, South Korea saw a net sale of 1.6185 trillion Korean won in foreign stocks, while stablecoin net outflows amounted to 1.6872 trillion Korean won. Unlike stock investments, which often reverse with market conditions, stablecoin outflows persist even during downturns, highlighting their unique utility as a channel for transferring capital to overseas exchanges and DeFi platforms.

The emergence of this cross-border function was accelerated by regulatory and structural changes. South Korea introduced stablecoin trading in its Korean won market relatively late, with Upbit being the last of the five major exchanges to list USDT/Korean won pairs in 2024. Prior to this, users had to purchase volatile assets like Bitcoin or XRP to transfer funds overseas, exposing them to price fluctuation risks. The introduction of KRW trading pairs allowed stablecoins to quickly assume this cross-border role. The Financial Services Commission began tracking cross-border stablecoin transfer data in January 2025, acknowledging stablecoins as a primary tool for capital movement. As early as 2019, global USDT trading volume had surpassed Bitcoin's, and South Korea's delayed adoption essentially compressed this development trajectory after 2024, intensifying the strategic importance of stablecoin liquidity.

Returning to Upbit's specific strategy, the fee waiver is a time-limited promotion ending on August 9, whereas Coinone's zero-fee policy for USDC has been permanent since October 2025. Historical precedents suggest limited long-term impact for such promotions. Korbit launched a zero-fee and reward campaign for USDC from January 13 to April 13, 2026, during which its stablecoin market share reached 3.48%.

However, once the campaign ended, trading volume reverted to Upbit and Bithumb. This pattern indicates that the volume stimulated by Upbit's current promotion is likely to fade post-campaign. Data from the promotion period confirms this volatility: the average daily trading volume 30 days prior was 46.96 billion Korean won, which increased by 162.0% to 123.06 billion Korean won after the promotion started. Excluding weekends, the weekday increase was even higher at 170%, rising from 55.03 billion Korean won to 148.69 billion Korean won.

The stimulus effect manifested rapidly but showed signs of quick exhaustion. On July 25, the day before the campaign, trading volume was 29.95 billion Korean won; on the first day (July 27, a Sunday), it reached 72.19 billion Korean won, doubling the previous weekend's figure. On the first working day, July 27, volume surged to 162.27 billion Korean won, peaking at 203.29 billion Korean won on July 29.

However, almost all 新增 volume came from USDT, whose average daily trading volume rose from 46.06 billion Korean won to 120.71 billion Korean won, maintaining a 98.1% share of Upbit's total stablecoin volume. Newly introduced coins like RLUSD (710 million Korean won average daily volume) and USDG (340 million Korean won) contributed only about 1% to the increase. RLUSD's volume dropped from 5.6 billion Korean won on launch day to around 100 million Korean won, while USDG fell from 2.

24 billion Korean won to negligible levels. Long-tail stablecoins such as USD1, USDS, USDE, and gold-linked assets like XAUT saw flat or declining volumes despite zero fees. The enthusiasm for new coins lasted only one day, and overall volume dropped from 148.65 billion Korean won in the first week to 846.8 billion Korean won in the second week (note: source text likely contains a typo in the second week figure, but the 33% weekday drop from 163.944 billion to 110.58 billion Korean won is preserved).

Exchange rates also disrupted the trend; the Korean won strengthened, causing USDT's price to fall from 1,517 Korean won on June 26 to 1,423 Korean won on August 4. This arbitrage opportunity meant part of the volume increase was driven by currency movements, not just fee waivers. Estimates show Upbit forfeited approximately 1 billion Korean won in fee income over the 15-day period, facing a dilemma: follow Coinone's permanent zero-fee model or sacrifice market share to preserve margins.

Regulatory institutionalization presents the final key variable in this strategic equation. Upbit appears to recognize that fee waivers yield only short-term gains and cannot permanently displace USDT's dominance. The government's plan to enact the Digital Asset Basic Act in 2026 includes regulations for licensing Korean won stablecoin issuers, reserve requirements, and user redemption rights. Simultaneously, the U.S. GENIUS Act is expected to be fully implemented by the end of 2026 or early 2027, potentially triggering a global wave of dollar-pegged stablecoin adoption.

Furthermore, Dunamu's ownership structure changed in November 2025 when Naver Finance made it a wholly owned subsidiary via a share swap. The two entities aim to build a payment ecosystem centered on stablecoins and digital wallets.

However, current laws like the Special Financial Transaction Information Act and the Virtual Asset User Protection Act prohibit virtual asset service providers from trading assets issued by affiliated parties. If Naver leads a consortium to issue Korean won stablecoins, Upbit may be restricted from listing them. Given this uncertainty, Upbit's current strategy is to maximize its position as a distribution hub for dollar-pegged stablecoins, securing liquidity and user base for future payment services before regulatory constraints potentially limit its ability to benefit from local stablecoin issuance.