[DigitalToday reporter Oh Sang-yup (오상엽)] As trading volumes at domestic digital asset exchanges such as Upbit and Bithumb cool, global exchange Binance is drawing attention by expanding products aimed at the South Korean market, including Korea ETF-linked perpetual futures.

On March 16, CoinGecko, a digital asset market data platform, put Upbit’s 24-hour trading volume at $1.32857 billion as of 3:10 p.m. That was about 84.9 percent lower than the peak of $8.79701 billion recorded on July 24 last year.

Bithumb’s 24-hour trading volume on the day was $546.54 million, down about 84.4 percent from $3.49748 billion recorded on Oct. 11 last year. The decline in volume is likely to directly weigh on earnings.

Upbit and Bithumb rely on fees for 97 to 98 percent of revenue, meaning a contraction in trading value immediately hits profitability. Upbit plans to set its 2025 cash dividend at 5,827 won per share, down 33.6 percent from 8,777 won a year earlier.

Market-wide investor sentiment has also yet to recover.

Bitcoin was priced at about 108 million won on the day, about 40 percent below the all-time high of 178.01 million won recorded on Oct. 8 last year. As price corrections and slower trading continue at the same time, an assessment is emerging that domestic exchanges have less room to defend their performance.

On the same day, the Korea Financial Intelligence Unit (FIU) held a sanctions review committee meeting and decided to suspend part of Bithumb’s business for 6 months and impose a fine of 36.8 billion won over alleged violations of the Act on Reporting and Using Specified Financial Transaction Information.

The partial suspension period runs from March 27 to Sept. 26. It also issued a disciplinary warning to the chief executive and a 6-month suspension for the reporting officer.

Authorities said Bithumb supported a total of 45,772 digital asset transfer transactions with 18 unreported overseas digital asset operators. They added that violations of know-your-customer obligations and transaction restriction obligations totaled about 6.59 million cases.

The total number of violations of the act found in the inspection came to 6.65 million cases. The cases were confirmed in an on-site anti-money laundering inspection conducted from March 17 to April 18 last year.

In an on-site inspection in 2023, Bithumb was also fined in the 80 million won range for violating KYC obligations. The 36.8 billion won fine exceeds the 35.2 billion won previously imposed on Dunamu, the operator of Upbit, for related violations of the act.

Against this backdrop, Binance is expanding Korea-related products. Binance announced it would list 'EWYUSDT', a tether (USDT)-based index perpetual futures contract, at 10:30 p.m. on March 16.

The product uses the U.S.-listed iShares MSCI South Korea ETF (EWY) as the underlying asset and supports up to 10 times leverage and 24-hour trading.

EWY is one of South Korea’s flagship ETFs that includes major domestic stocks such as Samsung Electronics, SK Hynix and Hyundai Motor. Binance will use it to provide global investors with a leveraged investment tool based on South Korean stocks.

Binance’s presence in South Korea is also growing. In monthly active users (MAU), Upbit and Bithumb ranked No. 1 and No. 2 in domestic digital asset exchange usage last year, while Coinone and Binance battled for third place. Binance’s MAU in South Korea was estimated at about 300,000 to 400,000 users, similar to Coinone.

The outflow of funds to overseas exchanges is also continuing. A joint report published in January by CoinGecko and Tiger Research estimated that about 160 trillion won in domestic digital asset investment funds moved to overseas exchanges last year.

While domestic exchanges face falling volumes and tighter regulation, overseas exchanges are absorbing domestic investment demand by offering a wider product range and stronger derivatives competitiveness.

A person in the exchange industry said, "Binance appears to be expanding its influence based on the expansion of Korea-related products and a user base ranked around third to fourth in South Korea," adding, "As long as the fee-centered revenue structure remains as it is now, earnings volatility at domestic exchanges could increase further during periods of market weakness."