South Korean Crypto Exchanges Face Scrutiny Over Fee Spikes Amid Regulatory Shift

Five South Korean exchanges are facing the Financial Supervisory Service (FSS) scrutiny. The regulatory body involvement became necessary following reports about outrageous fee hikes implemented among top exchanges in the Asian nation.

On July 24, 2024, a round table discussion ensued between the affected exchanges (including Bithumb, Upbit, Coinone, Korbit, and Gopax) and South Korean FSS. The meeting aims to urgently address the ongoing rumors and iron out the possible reasons for the price increments.

Triggering Event

Noteworthily, the FSS intervention was initiated by Bithumb’s July 23 announcement, revealing its intention to increase its usage fee rate from its initial 2.2% to 4.0% per annum. The significant increase, especially from one of South Korea’s top five exchanges, raised concerns about potential risks in the market.

Interestingly, while Bithumb has withdrawn its earlier decision, the fact that the move came amid fee hikes by various other exchanges raised the question of unfair competition. Upbit and Korbit increased their rates from 1.3% to 2.1% and 1.5% to 2.5%, respectively.

While these were relatively bearable, the Financial authorities deemed Bithumb’s new 4% rate potentially unreasonable. The authorities stated that deposit usage fees must be "reasonably calculated" based on operating income and incurred expenses in line with Article 5 of the Virtual Asset Industry Supervision Regulations.

The meeting, therefore, aimed at reevaluating the calculation methods for deposit usage fees and addressing discrepancies among exchanges regarding reasonable fee levels. Consequently, South Korea Crypto Exchanges were mandated to provide a detailed breakdown of their deposit management practices and fee calculation methods.

Regulatory Shifts Affecting South Korean Crypto Exchanges

Meanwhile, the deposit fee controversy is likely a small component of a broader regulatory shift taking place in the South Korean crypto market. Recently, the FSS announced plans for a system that could monitor unusual crypto trading activity. The system aligns with the newly implemented Virtual Asset User Protection and requires exchanges to provide detailed data.

Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence before making any trading or investment decisions.

Subscribe to our Newsletter

Join our community and stay up-to-date with the latest news, updates, and exclusive offers by subscribing to our newsletter. Enter your email address below to receive our monthly newsletter directly to your inbox.

pop up image

Experience the Best of Online Payment with Crypto

UPay offers mainstream-friendly access to crypto. Easily buy, swap, make payouts, and manage funds using our crypto card. No cross-border fees.