“Bithumb Finalizes Banking Agreement with KB, Signaling Major Shift in Cryptocurrency Landscape”

The South Korean cryptocurrency exchange Bithumb has established a banking partnership with Kookmin Bank (KB), one of the largest financial institutions in the country.

Experts indicate that this agreement signifies a “tectonic shift” in the domestic traditional finance and cryptocurrency industries.

While South Korean crypto exchanges previously had to persuade banks to collaborate, traditional finance companies are now actively seeking partnerships with cryptocurrency trading platforms, analysts suggest.

Bithumb’s New Banking Agreement

Bithumb trading volumes over the last year. (Source: CoinGecko)

This agreement has been in the works since at least August of last year, when Cryptonews.com reported that Bithumb was preparing to part ways with its long-time partner NongHyup Bank (NH) in favor of a deal with KB.

The South Korean publication Digital Times reported that sources familiar with the arrangement indicated Bithumb will begin transitioning its customers from NH to KB “on February 24.”

A branch of Kookmin (KB) Bank in South Korea. (Source: KBS News/YouTube/Screenshot)

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The bank and Bithumb will also introduce “account pre-registration” services prior to the official migration.

The outlet noted that “a reorganization” of partner banks’ agreements with major exchanges is now “feasible” as regulators engage in discussions related to the Industrial Promotion Act.

Both Bithumb and KB are optimistic that this partnership will enhance their market presence.

The exchange currently holds a market share of 20% but aims to gain ground on Upbit as it pursues a listing on the New York Stock Exchange.

The media outlet described Bithumb’s decision as “a strategic resolution,” highlighting that KB “has a strong base of customers aged 20-39.”

This demographic is crucial in the South Korean crypto market, where younger individuals exhibit a strong interest in cryptocurrencies.

More than 50% of users of the KB Star Banking personal finance app fall within the 20 to 39 age range.

KB is also one of only two banks offering the Nara Sarang Card, a specialized banking service for young Korean men conscripted into the military.

South Korean military conscripts. (Source: KBS Docu/YouTube/Screenshot)

A Banking Transformation

In the latter half of last year, KB reported having over 22 million account holders and 12.62 million monthly active users (MAUs).

Bithumb stated it was “preparing promotions” for the “upcoming pre-registration” to “create synergy” with the KB customer base.

NH, on the other hand, has the lowest MAU figures among the five largest banks in the country, with some reports suggesting that the process of opening a crypto wallet-linked account on its platform was “complicated.”

Bithumb has been partnered with NongHyup since 2018, the year when regulators mandated domestic exchanges to seek banking partners.

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The banks provide exchanges with real name-verified fiat on/off ramp bank accounts for each customer.

If exchanges fail to secure banking partners, they cannot offer their clients fiat-to-crypto trading.

This regulatory change effectively rendered the majority of South Korea’s crypto exchanges nonviable.

Only the “big four” exchanges – Bithumb, along with market leader Upbit, Coinone, and Korbit – were initially able to secure banking agreements.

A fifth exchange, GOPAX, later managed to establish a banking partnership with Jeonbuk Bank. However, following the collapse of the FTX exchange and an unsuccessful acquisition attempt by Binance, GOPAX has found itself in a precarious situation.

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‘New Environment in South Korean Banking Sector’

Unnamed insiders from the South Korean crypto industry stated that the deal exemplifies a new “atmosphere” where South Korean banks “are focusing on exchanges as new business partners.”

This marks a significant change and a “reversal” from the situation in 2018, when exchanges “had to invest all their efforts into forming partnerships with banks,” the publication noted.

Further pro-crypto “changes in the financial industry are expected to accelerate,” the outlet added. An anonymous crypto industry insider explained:

“As regulators are now actively discussing fostering the domestic crypto industry, exchanges are discovering that banks are more eager than ever to engage in business with them.”

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