Bithumb, a leading virtual asset platform, has announced the withdrawal of its proposed 4% annual increase in deposit usage fees. This decision follows additional review items discovered while complying with the Virtual Asset User Protection Act.
Consequently, the deposit usage fee will remain at the current rate of 2.2% per year.
Bithumb has apologized for any confusion caused and assured users that any future changes will be communicated promptly.
Bithumb Rolls Back Planned Fee Increase, Reaffirms Commitment to Customer Benefits
Bithumb, the leading virtual asset platform, announced that its deposit usage fees will remain at the previous rate of 2.2% per year.
Initially, Bithumb planned to implement the 4% annual usage fee starting from July 24th.
This fee included an additional 2% paid by Bithumb on top of the 2% annual interest managed by its affiliated bank, NH Nonghyup Bank.
This proposed fee was double the 2% per annum initially announced on the 19th and represented a 1.8% increase from the revised recent announcement of a 2.2% fee per annum.
Despite the rollback, Bithumb reiterated that the fee increase was intended to align with its policy of providing customers with maximum benefits.
The CEO of Bithumb, Lee Jae-won, stated that the increase in the KRW deposit fee was not a response to competition with other exchanges but a move to enhance customer-centered benefits.
He pledged, “As this is a promise we made to our customers, we will do our best to faithfully fulfill it as much as possible.”
The increased won deposit usage fee rate was set to be applied from July 24th, with accruals being made 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 every day.
South Korea’s VAUPA Sparks Fierce Competition Among Exchanges for Higher Deposit Rates
South Korean exchanges have started a deposit war with banks.
After the introduction of the User Protection Act, exchanges are required to pay interest on KRW deposits.#Upbit first announced a 1.3% interest rate. After #Bithumb announced 2.0%, Upbit increased its rate to 2.1%.… pic.twitter.com/lWhhkbbAei
— Korean Crypto Meerkat (@KCryptoMeerkat) July 23, 2024
South Korea’s new cryptocurrency law, the Virtual Asset User Protection Act (VAUPA), took effect on July 19, emphasizing the need for virtual asset service providers to safeguard customer funds and comply with national regulations.
Under VAUPA, exchanges must store and manage users’ cash deposits in contracted banks and pay interest on these deposits.
The introduction of this legislation triggered a dramatic, late-night race among virtual asset exchanges to raise deposit rates. The initial move came from Upbit, the largest virtual asset exchange in the country, which announced a 1.3 percent yearly interest rate at 10:00 p.m. on Friday.
Bithumb quickly responded an hour and a half later by setting its rate at 2 percent, promoting it as the highest in the industry.
Upbit adjusted its rate to 2.1 percent just 39 minutes after Bithumb’s announcement, and Bithumb then raised its rate by an additional 0.2 percentage points.
Korbit entered the fray around 1 a.m., increasing its deposit interest rate from 1.5 percent to 2.5 percent, the highest among the exchanges. Bithumb later increased its rate to 4.0 percent before reverting it.
Industry officials note that these exchanges are competing to increase their market share by attracting customers with higher deposit interest rates, which are significantly higher than the approximately 1 percent offered by securities firms.
However, these rates may change depending on market circumstances. Korbit stated, “For the remainder of July, we need to monitor market trends related to our company, including customer inflow.
Therefore, it’s difficult to make definitive statements about the August interest rates at this time. Since deposit interest rates can clearly be a significant factor in customers’ choice of exchange, our priority will be to adopt 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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