Bithumb’s Struggles Highlight Crypto Banking Integration in South Korea

Bithumb Korea, the operator of
South Korea’s second-largest cryptocurrency exchange Bithumb, faces a setback
as it fails to secure a deal with major local lender KB Kookmin Bank for the
issuance of real-name accounts, potentially hindering its efforts to attract
more traders.

Major Banks Yet to Forge
Alliances with Exchanges

Under the Act on Reporting and Using Specified Financial
Transaction Information, virtual asset exchanges in Korea are mandated to
utilize real-name accounts for transactions involving
Korean won through commercial banks. Industry officials confirmed on Friday that KB Kookmin Bank
notified Bithumb last week of its decision not to partner with the crypto
exchange to provide real-name accounts.

Bithumb Korea had aimed to
broaden its user base by forming a new partnership with KB Kookmin Bank, as its
existing contract with NH NongHyup Bank is set to expire on March 24. However,
the negotiations fell through, with reasons for the breakdown undisclosed.

Presently, each of the top five Korean
cryptocurrency exchanges have affiliations with commercial banks, but none
are linked to the four major commercial banks, including KB Kookmin, Hana,
Woori, and Shinhan. Upbit has partnered with internet
lender K bank, while Coinone and Gopax have associated with Kakao Bank and the regional lender Jeonbuk Bank, respectively.

NH NongHyup Contract Renewal Is Uncertain

The failure to secure a deal with
KB Kookmin Bank could also impact Bithumb's position in renewing its contract
with NH NongHyup Bank. NH NongHyup Bank renewed its agreement with Bithumb
Korea every six months for the past five years until March of last year, when
it signed a one-year contract.

Although Bithumb announced in
October that it would waive commissions on crypto trading to compete with
Upbit, the market anticipated the end of this policy due to concerns over
sustainability. Consequently, Bithumb ended the four-month commission-free
campaign on Feb. 5, introducing a 0.04 percent fee for all crypto transactions,
lower than Upbit's 0.05 percent commission.

This article was written by Tareq Sikder at www.financemagnates.com.

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