South Korea’s largest multi-billion dollar conglomerates in various sectors including insurance, telecommunications, gaming, and Internet are entering the cryptocurrency market by funding up-and-coming exchanges.
The country’s leading corporations have funded such exchanges as Korbit, Bithumb, and Upbit to be involved in the South Korean cryptocurrency exchange market, and be at the forefront of Blockchain development.
NHN and OKCoin
NHN Entertainment Corporation, better known as NHN, is a $1.2 bln company founded in 2013 which operated under the name Hangame Communications from 1999 to 2013. Alongside Nexon, NHN remains the largest gaming conglomerate in South Korea, with a market valuation of 1.29 trln Korean won.
On March 21, local cryptocurrency-focused media outlets reported that the NHN funded OKCoin – formerly the biggest cryptocurrency exchange in China prior to the country’s cryptocurrency trading ban in 2017 – was to launch OKCoin Korea.
In an interview with Blockchain Media Korea, OKCoin Korea president Cho Jeong-hwan stated that the company is finalizing plans and infrastructures to expand its cryptocurrency exchange to South Korea. Cho noted that OKCoin Korea would likely open within March and that the exchange would enable 60 cryptocurrency-to-Korean won pairings, which is far more than on Bithumb, which currently has the most cryptocurrency listings at 12.
Cho emphasized that all of the sophisticated technologies utilized to run OKEx, the third largest cryptocurrency exchange in the global market behind Binance and Huobi, would be integrated into the underlying system of OKCoin Korea.
The OKCoin Korea team is said to start with full-time employees and developers, and the company plans to expand its team aggressively as it grows rapidly within the South Korean market. NHN Investment Partners, a subsidiary firm of NHN Entertainment, has invested an undisclosed amount in the project, to ensure that OKCoin Korea can focus on its launch and sustaining its platform without financial struggles.
Initially, the original OKCoin trading platform, which operated in China before moving to Hong Kong was advanced by 100 developers. Because of this, President Cho and the multi-billion company in NHN acknowledge that the current team of 20 developers is not sufficient to run a major cryptocurrency exchange, and the team’s capacity would increase exponentially in the future.
Kakao and Upbit
Essentially, the ambitious plan of OKEx to expand its services into South Korea is the company’s only path to directly compete with Upbit, the forth largest cryptocurrency exchange in the world, and the biggest exchange in South Korea.
Upbit is operated by Dunamoo, a subsidiary company of Kakao that runs KakaoStock, the most popular stock brokerage application and index in South Korea. In the beginning, Kakao, being the largest Internet company in South Korea, refrained from directly entering the cryptocurrency market, possibly due to regulatory uncertainty.
As such, Kakao dove into the cryptocurrency market through Dunamoo by launching Upbit in October 2017. Upbit is a cryptocurrency-only exchange which adopts cryptocurrency trade pairings from US-based exchange Bittrex. Within months after its launch, Upbit started dominating the local market as the first cryptocurrency-only trading platform in South Korea.
As Upbit grew exponentially, Kakao executives joined the Upbit team in order to lead the company into the global cryptocurrency market. In February 2018, South Korean newspaper Chosun reported that Kakao communications director moved to Upbit to facilitate the company’s growth.
The unforeseen success of Upbit led Kakao to aggressively target the local cryptocurrency market. As Cointelegraph previously reported, Kakao has already talked to regulators about its plans to integrate cryptocurrencies to serve more than 12,000 merchants and over 100 mln users, and to launch its own initial coin offering (ICO).
However due to the current ban on domestic ICOs, Kakao may conduct its token sale outside of South Korea – a plan which local financial authorities including the Financial Services Commission (FSC) Chairman Choi Jong-ku have criticized.
FSC Chairman Choi said:
“Even if there is no prohibition on cryptocurrency or digital asset trading, there is a possibility that it [Kakao ICO] may be regarded as fraud or multi-level sales according to the issuance method. Since the risk is very high in terms of investor protection, the government has a negative stance on the ICO.”
Consequently, the South Korean government could legalize ICOs in the future as hinted by several authorities, to ensure that its Blockchain sector demonstrates a growth rate that is on par with other regions like Japan and the US.
SK Telecom, Nexon, and Korbit
Nexon, the largest gaming company in South Korea with a $11.5 bln valuation, acquired Korbit, the third largest cryptocurrency exchange in the local market, for $120 mln. NXC, the parent company of Nexon, purchased 65.19 percent of Korbit, becoming the majority owner of the company.
The company told TechCrunch in an interview:
“NXC has been reviewing and investing in startups with digital idea and technology and this investment was made with our positive view on the growth cryptocurrency industry.”
SK Telecom, South Korea’s biggest telecommunications company with a valuation of $17 bln, was the first major investor in Korbit alongside billionaire investor Tim Draper. NXC likely purchasedjust over 65 percent of the company because SK Telecom and other angel investors like Draper were not willing to sell their shares of the company.