Bithumb has suspended account registrations

South Korean cryptocurrency giant Bithumb is temporarily stopping accepting new clients amid reported problems with renewing its banking service contract.

Starting August 1, Bithumb, one of the popular Korean exchanges, stopped registering new clients due to the lack of a banking partner. The decision does not affect users already registered on the exchange; their trading and transfer of funds will occur as usual through existing accounts. 

At the beginning of the year, regulators introduced a ban on crypto trading using anonymous virtual bank accounts. According to the new rules, cryptocurrency transactions are allowed only through a virtual bank account that matches the account on the cryptocurrency platform. Such requirements are designed to eradicate cryptocurrency speculation and increase market transparency. Also, to monitor compliance with the Know Your Customer (KYC) procedure, anti-money laundering (AML) rules, as well as customer verification policies, cryptocurrency platforms must renew contracts with banks every six months.

Shinhan Bank, which collaborated with Bithumb, rejected the request to extend the contract, as did Nonghyup Bank, which was approached by the crypto exchange to conclude a new partnership agreement.

Nonghyup representative, noted that the bank’s decision was dictated by concerns about Bithumb’s cybersecurity, especially given the recent hack of the exchange. The June hacker attack resulted in the loss of approximately $30 million worth of cryptocurrency. And the level of data protection on the exchange does not allow the bank to conclude a contract with it for servicing verified accounts.

Thus, today, Bithumb is the only crypto platform among the Korean “Big Four” exchanges without a bank contract for opening new verified accounts. The remaining platforms concluded their contracts without problems. Coinone extended cooperation with Nonghyup Bank, Upbit signed a contract with Industrial Bank of Korea. Another major crypto platform, Korbit, has renewed its contract with Shinhan Bank.

A Bithumb representative says it plans to resolve the dispute and will soon begin registering new virtual accounts. But most experts doubt this, based on the strong position of Nonghyup Bank, suggesting that the exchange will have to look for other options to solve the problem.