Coinone, South Korea's third-largest cryptocurrency exchange, has denied rumors that it is negotiating a sale of a stake to Coinbase, thus cooling speculation that the American exchange giant is attempting to penetrate Korea's liquidity-rich market.
The rejection underscores how challenging it remains for global exchanges to gain a foothold in Korea's tightly regulated cryptocurrency sector, even as local players consolidate rapidly.
‘Completely unfounded’
The reaction came after Seoul Economic Daily reported on January 25 that Coinone chairman Cha Myung-hoon was exploring a partial sale of his stake, with Coinbase mentioned as a potential buyer. The media reported that management from Coinbase was set to visit Korea this week to meet with major local players, including Coinone.
"Reports of a stake sale are completely unfounded," a spokesperson from Coinone told local media. "It is true that we have received several proposals for collaboration from foreign exchanges and Korean companies, but we are merely in contact with various parties as part of exploring opportunities to expand the business. Interpreting it as a stake sale does not align with reality."
The company added that it remains open to partnerships with both foreign exchanges and local businesses, but that there are currently no concrete negotiations or plans underway.
Market reaction
Despite the rejection, the markets reacted strongly to the initial rumors. Com2uS Holdings, Coinone's second-largest shareholder with a stake of 38.42%, saw its shares rise over 17% on Monday. The stock briefly reached 26,300 won before closing at 23,850 won.
The significant reaction reflects the broad market understanding. Korean cryptocurrency exchanges have become attractive acquisition targets amid a wave of consolidation in the industry.
Regulatory pressure threatens
The speculation about a sale is notable, given Korea's changing regulatory environment. The Financial Services Commission (FSC) has proposed capping shareholdings of major shareholders at 15-20% as part of the second phase of the country's legislation on virtual assets, citing concerns over concentrated ownership among exchanges serving 11 million users.
Chairman Cha currently holds 53.44% of Coinone through his own stake (19.14%) and the holding company The One Group (34.30%). If such regulations become a reality, he will have to significantly reduce his stake—regardless of whether Coinbase is involved or not.
But the ruling Democratic Party decided on January 20 not to include the limitation in the current bill, although analysts note that the initiative may return if issues arise with market dominance or security.
Consolidation wave
The speculation about Coinone is taking place simultaneously with extensive restructuring in the Korean cryptocurrency exchange market. Naver Financial and Dunamu, which operates the market leader Upbit, have approved a merger through a comprehensive share swap. Mirae Asset Securities is pursuing an acquisition of Korbit, which is ranked fourth in the market. Binance recently received final regulatory approval to acquire Gopax, which is ranked fifth.
Korea's cryptocurrency market remains highly concentrated, with Upbit and Bithumb together holding over 97% of the market share according to government figures. Coinone officially stands at about 1.5%, while private estimates from CoinGecko suggest that the share may have risen to around 6.6% in January.
For Coinbase, which has long been eyeing the Korean market as one of the world's most active trading centers for retail investors, a local partnership would provide both regulatory protection and established infrastructure. However, Coinone's clear rejection indicates that such a partnership is far from guaranteed.