Bithumb's Struggles Highlight Crypto Banking Integration in South Korea

Friday, 16/02/2024 | 10:00 GMT by Tareq Sikder

KB Kookmin Bank informed the firm not to partner to provide real-name accounts.

The firm's current contract with NH NongHyup Bank is due to expire on March 24.

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.