The Korea Herald


Bithumb hits stumbling block in ambition to be market No. 1

By Im Eun-byel

Published : Feb. 16, 2024 - 16:51

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A screen shows bitcoin trading at over 70 million won ($52,500) at local crypto exchange Bithumb's headquarters in southern Seoul, Thursday. (Newsis) A screen shows bitcoin trading at over 70 million won ($52,500) at local crypto exchange Bithumb's headquarters in southern Seoul, Thursday. (Newsis)

Bithumb Korea, the operator of the country’s No. 2 cryptocurrency exchange Bithumb, has failed to seal a deal with major local lender KB Kookmin Bank for issuance of real-name accounts, jeopardizing its plan to attract more traders.

KB Kookmin Bank informed Bithumb last week that it will not partner with the crypto exchange to provide real-name accounts, industry officials confirmed Friday.

In Korea, virtual asset exchanges are required to utilize real-name accounts under commercial banks to facilitate transactions with Korean won, according to the Act on Reporting and Using Specified Financial Transaction Information.

Bithumb Korea sought to form a new partnership with KB Kookmin Bank to expand its user range, as its contract with NH NongHyup Bank is to expire on March 24. However, the deal fell through. Though reasons behind the breakup have not been shared, industry officials deem the lender was pressured by the uncertainty of the virtual assets market.

“The partnership is about more than just providing real-name accounts. Banks have to consider risks and compliance regarding virtual assets,” an industry official said.

Currently, the top five Korean crypto exchanges are each affiliated with commercial banks. However, none are associated with the four major commercial banks here -- including KB Kookmin, Hana, Woori and Shinhan.

Upbit, the top player in the industry, joined hands with internet lender K bank, while Coinone and Gopax are associated with Kakao Bank, the internet-only financial institution under tech giant Kakao, and regional lender Jeonbuk Bank, respectively.

The deal breakup has also penalized Bithumb’s position in renewing the deal with NH NongHyup Bank, industry officials viewed. For the past five years, NH NongHyup Bank had renewed the deal every six months with Bithumb Korea until last March, when it signed a one-year contract.

Amid renewed interest in the crypto market with the recent price surge of bitcoin, Bithumb, the No. 2 player in terms of market share, was proactively working to expand its customer range, even offering commission-free crypto trading in the past few months.

In October, Bithumb announced it would not charge commissions on crypto trading in an attempt to narrow the gap with No. 1 player Upbit. But the market speculated the crypto exchange to drop the free transaction policy soon for lack of sustainability, considering the crypto exchange has to show improved earnings for its initial public offering plan next year.

The operator eventually ended the four-month campaign on Feb. 5, changing to a 0.04 percent fee for all crypto transactions. That remains 0.01 percentage point lower than Upbit’s commission of 0.05 percent.

Bithumb Korea has been eyeing an initial public offering in the second half of next year, but for better market valuation the crypto operator has to show improved earnings. The company reported 115.1 billion won ($86.3 million) in accumulated sales up to the third quarter of 2023, before it adopted the free transaction policy.