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By Anna J. Park
Major cryptocurrency exchanges based in Korea, including Upbit and Bithumb, are in the spotlight following the successful Nasdaq debut Wednesday of U.S.-based cryptocurrency exchange Coinbase, which closed up 31.3 percent at $328.28 on its first day of trading.
Given that Coinbase's market cap was valued at over $87 billion based on the first day's closing price, expectations are mounting over the growth potential and possible increased market valuation of Korea's largest cryptocurrency exchange operator, Dunamu.
According to the CoinMarketCap site, Upbit's 24-hour transaction amount stood at $14.5 billion as of 2:10 p.m. Korea time, which is 2.8 times higher than Coinbase's $5.1 billion. Upbit's 24-hour trading volume has constantly ranked among the world's top three lately, far exceeding the U.S.-headquartered crypto exchange.
Bithumb is right behind Upbit in terms of its 24-hour transaction amount at $3.4 billion. Coinone took the third spot among the country's local cryptocurrency exchanges with $1.3 billion traded.
The total trading volume of these top three performers in Korea has been almost equivalent to or often above the average daily trading volume of the nation's benchmark KOSPI market this year, which is about 19.3 trillion won ($17.2 billion).
The number of users as well as their revenues have also grown rapidly, especially for Upbit. The number of customers at Upbit stood at 3.2 million last month, which is up nearly three-fold compared to January.
In terms of annual revenue, Dunamu ― the operator of Upbit ― saw its 2020 net profit surge 308 percent from the previous year to 47.7 billion won. The company's annual revenue in 2020 rose 26 percent year-on-year to 176 billion won, while operating profit stood at 86.6 billion won.
The firm's monthly revenue and operating profit during the first two months of this year exceeded the entire figure for last year, with sales reaching 290 billion won and operating profit 260 billion won in just January and February. The company is also said to own several hundred bitcoins ― which it received as trading fees ― as assets, while it also has more than one trillion won in cash.
Based on this solid growth, Dunamu's market valuation has fast grown to about 16 trillion won on the local OTC (over-the-counter) market, more than tripling in less than a month. Market experts also say Upbit's market cap has much more room for growth considering its revenue and profits compared to Coinbase.
Dunamu's official position that it has left all possibilities open, hinting at a possible listing in the U.S., which is also boosting the firm's appeal among investors.
Bithumb sees profit increase amid M&A speculation
While Dunamu might aim to go public in the U.S., its competitor Bithumb is likely to be sold off, although details have yet to be revealed.
Following a failed attempt to sell it in 2018, there have been rumors of potential bidders early this year, including major global financial companies such as Morgan Stanley, VISA, and JPMorgan. However, the three firms all denied such rumors last month to The Korea Times.
Naver was also mentioned as a potential bidder to acquire Bithumb Korea, but the Korean internet search portal denied that possibility, according to other local media. The Korean-Japanese game company Nexon had also reportedly been cited as a bidder earlier this year, yet no agreement was reached as the two sides failed to narrow their differences over the sale price. Due to the cryptocurrency exchange's complicated stake structure, market watchers say an IPO is unlikely.
While remaining unsure of its future path, whether it is an IPO or sale, Bithumb's earnings have grown markedly lately. Its net profit of 141 billion won in 2020 was up 279 percent from the previous year, while its annual revenue of 218.5 billion won in 2020 was up 51 percent.
