Bithumb Cancels Proposed Increase of 4% on KRW Deposit Fees, Retains Existing 2.2% Rate

Bithumb, a prominent virtual asset platform, has declared the retraction of its proposed 4% annual rise in deposit usage fees. This choice comes after further review items were identified while adhering to the Virtual Asset User Protection Act.

As a result, the deposit usage fee will continue at the existing rate of 2.2% annually.

Bithumb has expressed regret for any misunderstanding caused and has assured users that any forthcoming changes will be communicated without delay.

Bithumb Cancels Planned Fee Increase, Reaffirms Focus on Customer Advantages

Bithumb, the leading virtual asset platform, confirmed that its deposit usage fees will stay at the previous rate of 2.2% annually.

Initially, Bithumb intended to implement the 4% annual usage fee starting from July 24th.

This fee encompassed an additional 2% paid by Bithumb on top of the 2% annual interest managed by its affiliated bank, NH Nonghyup Bank.

The proposed fee was double the 2% per annum initially disclosed on the 19th and represented a 1.8% increase from the recently revised announcement of a 2.2% fee per annum.

Despite the cancellation, Bithumb reiterated that the fee increase was aimed at aligning with its policy of delivering maximum benefits to customers.

The CEO of Bithumb, Lee Jae-won, indicated that the increase in the KRW deposit fee was not a reaction to competition with other exchanges but rather a strategy to enhance customer-focused benefits.

He committed, “As this is a promise we made to our customers, we will do our utmost to fulfill it as faithfully as possible.”

The increased won deposit usage fee rate was set to take effect from July 24th, with accruals being calculated at the existing 2.2% per annum rate until July 23rd.

The deposit calculation standard remains unchanged, based on the won balance as of 23:59:59 each day.

South Korea’s VAUPA Triggers Intense Competition Among Exchanges for Higher Deposit Rates

South Korean exchanges have initiated a deposit competition with banks.

Following the enactment of the User Protection Act, exchanges are mandated to pay interest on KRW deposits.#Upbit first announced a 1.3% interest rate. After #Bithumb declared 2.0%, Upbit raised its rate to 2.1%.… pic.twitter.com/lWhhkbbAei

— Korean Crypto Meerkat (@KCryptoMeerkat) July 23, 2024

South Korea’s new cryptocurrency legislation, the Virtual Asset User Protection Act (VAUPA), became effective on July 19, highlighting the necessity for virtual asset service providers to protect customer funds and adhere to national regulations.

Under VAUPA, exchanges are required to store and manage users’ cash deposits in contracted banks and provide interest on these deposits.

The introduction of this law sparked a dramatic, late-night scramble among virtual asset exchanges to elevate deposit rates. The initial move came from Upbit, the largest virtual asset exchange in the nation, which announced a 1.3 percent annual interest rate at 10:00 p.m. on Friday.

Bithumb swiftly responded an hour and a half later by establishing its rate at 2 percent, marketing it as the highest in the sector.

Upbit adjusted its rate to 2.1 percent just 39 minutes after Bithumb’s announcement, prompting Bithumb to subsequently raise its rate by an additional 0.2 percentage points.

Korbit joined the competition around 1 a.m., increasing its deposit interest rate from 1.5 percent to 2.5 percent, the highest among the exchanges. Bithumb later raised its rate to 4.0 percent before retracting it.

Industry experts observe that these exchanges are vying to expand their market share by enticing customers with elevated deposit interest rates, which are considerably higher than the roughly 1 percent offered by securities firms.

However, these rates may fluctuate based on market conditions. Korbit stated, “For the remainder of July, we need to monitor market trends related to our company, including customer inflow.

Therefore, it’s challenging to make definitive statements about the August interest rates at this moment. Since deposit interest rates can clearly be a significant factor in customers’ choice of exchange, our priority will be to implement competitive policies to attract customers.

As of the first quarter of this year, the total deposits at the five leading virtual asset exchanges are reported as follows: Upbit at 6.3 trillion won ($4.5 billion), Bithumb at 1.6 trillion won, Coinone at 112.8 billion won, Korbit at 56.4 billion won, and GOPAX at 4.1 billion won.

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