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5F, 526 Nonhyeon-ro,
Gangnam-gu, Seoul, Korea
The implementation of the Virtual Asset User Protection Act (VAUPA) in South Korea on November 19 has led to a competitive race among virtual asset exchanges for deposit interest rates. On November 20, the five major South Korean cryptocurrency exchanges—Upbit, Bithumb, Coinone, Korbit, and GoPax—set their customer deposit interest rates in consultation with their partner banks. Korbit offered the highest rate at 2.5% per year (pre-tax). Initially, Korbit had announced a rate of 1.5% but increased it after Upbit and Bithumb raised their rates to 2%. Upbit, holding the largest market share with $6 trillion in deposits, set its annualized rate at 2.1%, up from an initial 1.3%. Bithumb, the second-largest exchange, increased its rate to 2.2% after initially announcing 2%. This competition among exchanges is driven by the VAUPA, which requires cryptocurrency user deposits to be managed by commercial banks and mandates exchanges to pay interest on these deposits. Previously, exchanges could not pay interest due to regulations classifying it as pseudo-receipt. Each major exchange has a real-name account partnership with different banks: Upbit with K Bank, Bithumb with NH Bank, Coinone with Kakao Bank, Korbit with Shinhan Bank, and GoPax with Jeonbuk Bank. According to CoinGecko, Upbit dominates the domestic crypto exchange market with over 70% of the trading volume, followed by Bithumb with around 25%, and the remaining exchanges holding less than 1% each.
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