Current Banking Partnership
Bithumb, a prominent South Korean cryptocurrency exchange, might soon part ways with its long-time banking partner, NongHyup Bank (NH). Instead, the exchange could enter into a partnership with Kookmin Bank (KB). Reports from Insight Korea and Mega Kyungjae indicate that negotiations between Bithumb and Kookmin Bank have likely concluded successfully.
Background on Bithumb’s Banking History
Since 2018, Bithumb has collaborated with NH. This partnership was necessary due to South Korean regulations that require exchanges to have verified fiat accounts for crypto transactions. Typically, exchanges and banks sign contracts lasting one or two years. However, Bithumb has consistently opted for one-year rolling contracts with NH.
Recently, NH extended its agreement with Bithumb for only six months, and this deal will expire on September 24. Although Bithumb has stated that no final decision has been made regarding a new banking partner, reports suggest that the necessary documentation has been submitted to financial regulators. If approved, a partnership with KB could begin as early as late September.
Bithumb’s Financial Performance
Interestingly, Bithumb’s potential switch in banking partners coincides with the exchange’s announcement of strong financial results. For the second quarter of the fiscal year, Bithumb reported a remarkable 639.2% increase in operating profits compared to 2023. Additionally, sales surged by 193.6%, reaching KRW 242.9 billion ($180 million), according to Bloter.
Kookmin Bank’s Strategic Goals
Kookmin Bank’s interest in Bithumb is part of its broader strategy to attract younger clients. KB’s CEO, Lee Jae-geun, aims to differentiate the bank from competitors through a “digital retail” approach. This strategy focuses on appealing to younger, wealthier South Koreans. Specifically, KB targets individuals aged 20-49, who represent 77% of the bank’s customer base. The bank is particularly interested in the 30-39 age group, which constitutes 1.89 million users.
Competitive Landscape
Moreover, other exchanges are also making significant moves in the banking sector. For instance, GOPAX, another competitor of Bithumb, recently renewed its contract with Joenbuk Bank. Additionally, GOPAX is awaiting approval for a takeover bid by Megazone, which would involve acquiring Binance’s majority stake in the platform.
Upbit’s Market Dominance
In contrast, Upbit remains a dominant force in the South Korean crypto market. It holds nearly 65% of the market share, largely due to its successful partnership with K Bank. This partnership enhances the accessibility of account opening and transactions, contributing to Upbit’s market success.
Future Outlook
An industry insider suggests that the potential deal between Bithumb and Kookmin Bank could heighten competition with Upbit. Furthermore, Kookmin Bank recently secured a deal with Samsung Financial Group to offer banking services through the Monimo app. This partnership is expected to attract premium customers and bolster KB’s market position.
Conclusion
In summary, Bithumb’s potential shift to Kookmin Bank underscores evolving trends in the cryptocurrency and banking sectors. Both industries are adapting to new market dynamics and changing consumer preferences.
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