The South Korean crypto exchange Bithumb ended its four-month campaign of commission-free crypto trading on February 5.

Per Insight Korea, Bithumb began charging a 0.04% fee “for all crypto transactions starting from February 5.”

Bithumb vs Upbit: South Korean Crypto Exchange Rivals Go to War?

The exchange has been trying to claw back market share from its biggest rival, Upbit. In recent years, Upbit has eclipsed Bithumb to become the South Korean market leader.

The exchange also wants to surpass Upbit by becoming the first South Korean crypto exchange to go public on the KOSPI stock market index.

Bithumb told its customers it was doing away with commission fees on October 4 last year. This has led to a rise in trading volumes on Bithumb, with Upbit losing its once-total domination of the market.

Trading volumes on the Bithumb and Upbit crypto exchanges over the past three months. (Image created using materials from CoinGecko)

Bithumb and Upbit rivals Coinone and Korbit also did away with commission fees, with Upbit refusing to follow suit. The media outlet wrote:

“Commission-free trading has been the main driving force behind Bithumb’s growth over the past four months. Bithumb’s market share, which was only 10% in September last year, grew rapidly, reaching 51% at the end of December.”

However, some have criticized Bithumb’s policy, stating that the exchange needs to focus on its financial performance.

The trading platform saw net profits drop by 46% year-on-year in the third quarter. The media outlet said the industry’s “consensus” was that “pressure to improve performance was the reason Bithumb ended commission-free trading.”

Critics have pointed out that fees are “the main source of revenue” for the South Korean crypto exchange industry. However, Bithumb official denied this, saying:

“The reason we launched [commission fee-free trading] was to celebrate the 10th anniversary of our founding, while also securing more market share.”

The spokesperson said that in the industry, “fees are directly related to income.” And that meant that Bithumb “cannot keep offering fee-free trading forever.” The official concluded:

“We are making efforts to dispel concerns caused by the abolition of our commission-free trading policy. We want to retain customers. We have introduced the industry’s lowest commission rates of 0.04%.”

South Korea watchdog warns financial firms on risk management

— Reuters Business (@ReutersBiz) February 5, 2024

The platform is also trying to woo customers by offering lucrative points-type rewards programs.

Earlier, Han Chang-joon, the former Chief Financial Officer of Terraform Labs, was extradited to South Korea by police in Montenegro.

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