Bithumb, a prominent virtual asset platform, has decided to roll back its proposed 4% annual increase in deposit usage fees in compliance with the Virtual Asset User Protection Act. Following additional review items, the platform announced that the deposit usage fee would remain at the current rate of 2.2% per year, contrary to the originally planned increase. Bithumb assured its users that any future changes to fees would be communicated promptly, prioritizing customer satisfaction over competition with other exchanges.
The decision to rollback the fee increase came after Bithumb initially intended 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. Despite the rollback, Bithumb reiterated its commitment to providing customers with maximum benefits, with CEO Lee Jae-won stating that the fee adjustments were designed to enhance customer-centered benefits and fulfill promises made to users. The existing deposit calculation standard remains unchanged, based on the won balance as of 23:59:59 every day.
In response to South Korea’s Virtual Asset User Protection Act (VAUPA), which came into effect on July 19, requiring exchanges to pay interest on KRW deposits, virtual asset exchanges engaged in a fierce competition to offer higher deposit rates. The introduction of this legislation sparked a late-night race among exchanges to raise deposit rates, with Upbit, the largest virtual asset exchange in the country, being the first to announce a 1.3% yearly interest rate. Bithumb quickly responded by setting its rate at 2%, prompting Upbit to increase its rate to 2.1%. The race continued as Korbit entered the competition, raising its deposit interest rate to 2.5%, with Bithumb increasing its rate to 4.0% before reverting it back.
Industry officials noted that these exchanges were vying to increase market share by attracting customers with higher deposit interest rates, which were considerably higher than rates offered by securities firms. The total deposits at the five leading virtual asset exchanges as of the first quarter of the year reflected diverse figures, with Upbit having 6.3 trillion won in deposits, followed by Bithumb at 1.6 trillion won. The competition for higher deposit rates highlighted the significance of competitive policies in attracting customers to exchanges, emphasizing the importance of monitoring market trends in setting rates for the future.
The late-night race to increase deposit interest rates among South Korean exchanges underscored the competitive landscape shaped by the VAUPA regulations. Exchanges quickly adjusted their rates in response to competitors to offer the highest interest rates to customers, ultimately aligning with Bithumb’s commitment to enhance customer benefits. The rollback of the planned fee increase by Bithumb demonstrated a dedication to ensuring transparent communication with users and prioritizing customer satisfaction over competition with other exchanges. As the cryptocurrency market continues to evolve, exchanges must adapt their policies to align with regulatory requirements and remain competitive in attracting and retaining customers.
