Korea's Three Major Exchanges Acquired by TradFi: Is the Korean Crypto Market Being "Co-opted"?

Original Author: @xparadigms

Original Translation: AididiaoJP, Foresight News

In Asia, the role of centralized exchanges (CEXs) differs significantly from that in the West. Retail traders rely more on exchanges rather than managing their own assets through non-custodial wallets. This reliance is most extreme in South Korea, where regulators strictly limit fiat on-ramp and off-ramp channels to just five licensed CEXs.

CEX is the Sole Gateway for Korean Users into the Crypto World

Converting Korean Won to cryptocurrency, and vice versa, must go through a strictly controlled channel: a user's CEX account must be linked to a real-name authenticated bank account, and each exchange can only partner with one designated bank.

Since the Financial Supervisory Service (FSC) implemented the real-name system on January 30, 2018, deposits and withdrawals can only occur between a bank account and an exchange account under the same bank name. Third-party transfers are not allowed, anonymous virtual accounts are prohibited, and foreigners and minors were initially excluded from participating.

All Virtual Asset Service Providers (VASPs) must first register with the Korea Financial Intelligence Unit (KoFIU) to operate in South Korea. Registration itself requires obtaining ISMS information security certification from the Korea Internet & Security Agency (KISA) and establishing a complete Anti-Money Laundering (AML) system. However, even passing this stage only allows for crypto-to-crypto trading.

To open the Korean Won market, an exchange must also secure a "Real-Name Bank Partnership Contract." Banks bear the compliance risk for these contracts, making them extremely cautious about issuance. Consequently, most registered VASPs still can only offer crypto-to-crypto trading. Ultimately, only five exchanges have successfully crossed both the "VASP Registration" and "Real-Name Bank Contract" thresholds, enabling them to provide fiat-to-crypto exchange services. Each exchange is locked into a single partner bank.

Traditional Finance is Buying into CEXs at the Cycle Bottom

For years, Korean crypto exchanges and traditional financial institutions existed in separate worlds, separated by the regulatory principle of "Separation of Finance and Crypto" (금가분리/Geumga Bunri). Although not fully codified into law, financial authorities strictly enforced this principle, effectively barring banks and securities firms from engaging in crypto businesses.

In 2026, this line began to blur. Within about four months, three of South Korea's top four exchanges attracted significant traditional financial shareholders.

Now, exchanges are no longer seen merely as machines for generating trading fees, but as customer gateways and liquidity venues for the next phase of Korean finance—including Korean Won stablecoins, custodial services, and RWA products. For banks or securities firms, directly buying equity is the fastest way to acquire VASP licenses, an existing user base, and deep Korean Won liquidity, positioning themselves ahead of the full implementation of the Digital Asset Basic Act (DABA).

This race is also a race against time. Under DABA, the Financial Supervisory Service is expected to set a 20% cap on the shareholding of a single major shareholder in a crypto exchange (agreed upon on March 3, 2026). Two major transactions have occurred in the past four months, and the key event to watch in the second half of the year is whether the merger between Upbit and Naver Financial will be finalized.

Case 1: Korbit & Mirae Asset, The First Mover (February 2026)

Mirae Asset, South Korea's largest securities firm, acquired a 92.06% stake in Korbit for approximately $92 million, buying out the shares of NXC and SK Square. It announced plans to acquire an additional 5.42%, ultimately reaching a 97.15% stake. Given Korbit's market share of only about 1%, this deal appeared more like a bet on its license, custodial capabilities, and operational experience rather than trading volume.

Case 2: Upbit & Hana Financial, The Largest and Most Symbolic Deal (May 2026)

Hana Financial Group agreed to purchase a 6.55% stake in Dunamu (the operator of Upbit) from Kakao Investment for approximately $667 million. This marked the first major equity transaction between a traditional Korean banking group and a digital asset company.

Case 3: Coinone, OKX Ventures & Korea Investment & Securities (May 2026)

OKX Ventures and Korea Investment & Securities (KIS) each invested about $53 million to jointly acquire a 19.6% stake in Coinone, South Korea's third-largest exchange. The parties deliberately split the shareholding to circumvent the anticipated 20% cap while allowing the CEO to retain management control.

The Crypto Market Has Become Too Big to Ignore

What traditional finance is truly buying is not the fee revenue stream, but the Korean Won-denominated on-ramp and off-ramp pipeline itself. In a market where only five licensed CEXs can convert Korean Won into cryptocurrency, owning equity in an exchange equates to owning a pipeline connecting Korean retail savings with digital assets.

Viewed this way, low trading volumes are almost irrelevant to the acquirers—the value of a legally protected channel is structural, not cyclical.

Acquisition is also the fastest path to obtaining a license. For a bank or securities firm, starting from scratch to apply for VASP registration and secure a real-name bank contract would take years, with no guarantee that regulators and partner banks would eventually approve.

Available acquisition targets are also dwindling. Korbit has been taken, Coinone is in the process of being traded, and Upbit and Bithumb are too large and may be restricted to under a 20% stake under the anticipated DABA rules. It is foreseeable that subsequent deals might seem irrational based on fee metrics, but as strategic options on the Korean Won fiat gateway, they are perfectly logical.

Now, crypto has become too big for traditional financial companies to ignore.