Bithumb Switches to KB Kookmin Bank
South Korea’s banking sector is witnessing intensified competition as financial institutions vie for partnerships with cryptocurrency exchanges. In a significant shift, Bithumb, the country’s second-largest crypto exchange, has transitioned from NH Bank to KB Kookmin Bank as its official banking partner.
Since the transition was announced in December last year, more than 1.5 million KB accounts have been linked to Bithumb. “We’re seeing the advantages of partnering with a major bank,” a Bithumb representative stated.
Regulatory Landscape and Competitive Pressures
Under South Korea’s financial regulations, the top five crypto exchanges are permitted to partner with only one bank. Users must hold an account with the designated bank to trade on a specific exchange, leading to heightened competition among financial institutions eager to capitalize on the crypto sector’s liquidity.
NH Bank’s Loss, KB Kookmin’s Gain
From January 2018 until March 2024, Bithumb and NH Bank have a seven-year cooperation. Around 1.7 trillion won in cryptocurrency-related deposits were accumulated by NH Bank during this time, and the bank used these assets for loans and investments that produced significant profits. Bithumb, on the other hand, decided to transfer to KB Kookmin Bank because it wanted to increase its user base, while KB wanted to draw in additional deposits. Since the partnership was formalized, KB’s demand deposits surged by over 3 trillion won, rising from 151.5 trillion won at the end of December to 154.7 trillion won ($106 billion) as of March 21. Additionally, 1.52 million KB accounts have been registered with Bithumb.
Upbit and K Bank’s Stronghold
Meanwhile, Upbit, South Korea’s largest crypto exchange, has maintained its alliance with K Bank since June 2020. Currently, 6.4 trillion won—nearly one-quarter of K Bank’s total deposits (27.62 trillion won)—are linked to Upbit. The online bank’s customer base has skyrocketed from 2.19 million in June 2020 to 13.39 million as of last month, with 6 million accounts connected to Upbit.
Other Banks Positioning for Crypto Partnerships
Other prominent banks have also staked their claims in the crypto sector. Shinhan Bank has an established partnership with Korbit, the fourth-largest exchange, while Kakao Bank collaborates with Coinone, the third-largest.
Competition for Upbit’s Future Partnership
Since Upbit’s contract with K Bank is about to end in October, all eyes are on the company. The massive flow of money and client accounts that such changes can cause has been illustrated by Bithumb’s shift from NH Bank to KB Kookmin Bank. There is now intense competition among banks to become partners with Upbit as a result of the contract’s imminent expiration.
K Bank remains optimistic about retaining Upbit. “We’ve had a long and successful partnership with Upbit, and we expect it to continue,” a K Bank official stated. However, Woori Bank and Hana Bank are actively positioning themselves as potential contenders. Woori Bank, which has never previously partnered with a crypto exchange, is now keen on securing Upbit following recent regulatory shifts permitting corporate crypto investments. “Woori Bank has never worked with crypto exchanges, but now that corporate crypto investments are permitted, it’s actively seeking a partnership with Upbit,” said an industry insider.
Hana Bank’s Strategic Moves
Hana Bank has also made strategic moves to court Upbit, introducing its real-name verification system, Hana Certificate, on the exchange’s platform in October. “We added Hana Certificate because we’re interested in partnering with a crypto exchange,” a bank official disclosed.
Banks Eye Crypto Exchanges for Future Growth
Banks are scrambling for these partnerships as they recognize crypto exchanges as a lucrative source of low-cost daily deposits, particularly in an era of anticipated lower interest rates. “The average daily trading volume on domestic crypto exchanges is nearing 4 trillion won,” noted a bank official. “That’s essentially low-cost funding that can be used for lending to generate interest income.”
The High-Stakes Battle Ahead
As the October deadline approaches, South Korea’s financial landscape is bracing for a high-stakes battle, with banks eager to secure a foothold in the booming crypto economy.
