Upbit tends to be the most active exchange when it comes to the trading of HIVE. It is also known for its pump and dump schemes.
One of the reasons why this exchange can wield so much influence is due to the fact it is closed. By this, it is not open to people from across the world. My understanding is it only provides service to those in South Korea.
HIVE is not a heavily traded coin, at least in comparison to the likes of Bitcoin and Ethereum. Hence, the ability to move things is much greater. This is compounded by the fact that one of the largest exchanges, in terms of the holdings of HIVE, is isolated from the rest of the market participants. We can see how this can have an outsized impact.
Doing a quick check on Coingecko, the present volume from Upbit accounts for 68% of HIVE's trading volume the last 24 hours. This is rather common.
Against this backdrop, how does the announcement this week affect HIVE?
Will Upbit Sanctions Affect Hive?
It seems Upbit is being accused of not complying with the laws in South Korea.
The Financial Information Analysis Institute (FIU) notified the exchange of the possible sanctions.
Crypto exchange Upbit may face possible sanctions in South Korea for not complying with the country's money laundering and know your customer (KYC) obligations, according to a report from local news site Maeil.
Before going any further, we have to mention that this is rather commonplace. We see crypto exchanges getting attacked all the time. Many countries are unfriendly to crypto, with exchanges posing a threat.
Personally, I am not familiar with the stance of the South Korean government to state one way or another as to what the motivation is here.
Another tidbit that is worthy of bringing up is the fact that banks are regularly hit with this. In some instances, the bank is complicit in the money laundering, intentionally being lax with its oversight. HSBC is a bank that is well know for laundering money.
Other times there is simply the numbers game. Large entities have a tough time checking on everything. There is bound to be a few transactions that sneak through, even if the bank is intent on catching everyone.
Since I tend to believe in the greed of bankers, siding with the idea they prefer making money over compliance, the default, in my opinion, is to be as lax as they can get away with.
That means Upbit is likely far removed from FTX. However, does the exchange look the other way as often as possible? Most likely.
What Does This Mean For HIVE?
The answer to this question can be answered in a couple different ways.
As it pertains to Upbit, probably not much. If the sanctions are applied to the exchange, this would be the penalty:
The decision would “essentially restrict new customers from transferring virtual assets outside the exchange for a certain period of time,” Upbit told Maeil.
A suspension of the enlisting of new customers is not the worst penalty in the world. It would be for roughly 6 months. Hence, it would appear, the excisting customers, including those who are laundering money, could still operate as normal.
From this perspective, it might be business as usual.
The second angle on this is a bit broader.
It is not to the benefit of the ecosystem to have so much activity operating on one exchange. Instead, having transactions across multiple platforms is required. This means spreading out the activity.
Of course, this is easier said than done.
We know many exchanges are not listing HIVE including the dominant player in the United States, Coinbase. For this reason, it is best to start looking at decentralized exchanges. While it doesn't have the impact which would come from suddenly being added to a Coinbase, it will help with the resiliency of the entire ecosystem.
This does tend to bring about the chicken or the egg scenario. To get listed, exchanges want volume. Unfortunately, it is often hard to get volume without being listed.
I always thought that it was up to Hive to build its own infrastructure. Being isolated like we are means that nobody will do it for us. Forks of Ethereum have the advantage of riding on the back of what that community does.
Hive is in a different situation, We have to do it ourselves.
As for Upbit, even if sanctioned, the impact should be minimal.
Posted Using INLEO
