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South Korea’s second-largest cryptocurrency exchange Bithumb is launching “Plus Club,” a rewards program offering approximately 13% annualized Bitcoin returns on deposited assets, marking its 13th anniversary. The move responds to fee-free trading initiatives by DigitalX and Coinone, intensifying cutthroat competition among exchanges ahead of virtual asset taxation set to begin next year. Despite the fee waivers, Upbit and Bithumb still command over 90% of South Korean won-denominated trading volume, maintaining their duopoly. Industry analysts note that fee competition alone is insufficient to absorb existing users and liquidity, while also raising concerns about market distortion given exchanges’ heavy reliance on fee revenue.
Key Elements
South Korea’s second-largest cryptocurrency exchange Bithumb has unveiled an aggressive rewards program offering approximately 13% annualized Bitcoin returns on customer deposits. With DigitalX and Coinone having successively announced zero-fee trading, Bithumb’s entry into the benefits race is expected to further intensify cutthroat competition among exchanges ahead of virtual asset taxation next year.
Bithumb announced on the 3rd that it will launch the “Plus Club” rewards program on the 4th, marking its 13th anniversary, targeting new subscribers and users with no trading history this year. Members who join the program will earn Bitcoin daily at an annualized rate of approximately 13% based on their average daily asset holdings. The benefit is capped at 14,000 won (approximately $10) per day, 420,000 won (approximately $310) per month, and up to 5 million won (approximately $3,700) annually. Eligibility requires monthly cumulative trading volume of at least 50 million won (approximately $37,000) among won-denominated trading customers.
Bithumb previously offered 10% annualized benefits during its 12th anniversary event, and has now raised the rate by 3 percentage points. A Bithumb representative said, “This program was prepared to give back to customers in celebration of our 13th anniversary,” adding, “We will continue to strengthen market leadership and user benefits with a customer-centric approach.”
The move is widely interpreted as a response to the fee-free policies of DigitalX and Coinone. DigitalX, which has been incorporated into Mirae Asset Group, has been waiving trading fees on all won-market listings for one year starting from the 24th of last month. Coinone also eliminated trading fees on its won market for all app and web users starting from the 26th of last month. Coinone is additionally offering new subscribers Bitcoin worth 30,000 won (approximately $22), and is fully waiving fees—including regulatory agency costs—for customers using Korea Investment & Securities’ domestic stock trading service (WTS) through the Coinone app. The fee benefit cap is 2 billion won (approximately $1.5 million) per day, with a cumulative maximum of 40 billion won (approximately $29.4 million).
Industry observers suggest that DigitalX, backed by Mirae Asset Securities, and Coinone—in which Korea Investment & Securities holds a 20% stake—are effectively engaged in a proxy war. A virtual asset industryattle.”
Duopoly Remains Firmly Intact
Despite the fee waivers and rewards competition, the Upbit-Bithumb duopoly remains unshaken. An analysis of CoinGecko data shows that as of 9 a.m. on the 2nd, among South Korea’s five major won-based exchanges, Upbit held 49.30% and Bithumb 43.47% of 24-hour trading volume—together accounting for 92.77% of the total. Coinone stood at 5.69%, Korbit at 1.51%, and Gopax at a mere 0.03%.
The combined share of Upbit and Bithumb was 96.23% on the 23rd of last month, just before DigitalX implemented its fee waiver. After Coinone joined the fee-free movement, the figure dropped to 89.77% on the 30th of last month, but rebounded to 96.16% the following day. Since then, it recorded 93.79% on the 1st and 92.77% on the 2nd, mostly staying above 90%.
Coinone’s share rose from 3.57% on the 23rd of last month to 5.69% on the 2nd, while DigitalX also climbed from 0.17% to 1.51% over the same period. However, Coinone experienced significant volatility, surging to 9.51% on the 30th of last month before plunging to 3.29% the next day. DigitalX also remains stuck in the 1% range.
Cryptocurrency trading exhibits strong network effects: users gravitate toward exchanges with deep order books and abundant liquidity, and more users in turn generate greater liquidity. Industry analysts note that fee waivers alone are insufficient to sustainably absorb existing users and liquidity. A virtual asset industry source said, “Fee waivers can boost short-term trading volume, but there are limits to convincing existing customers to move their assets to another exchange. Breaking the duopoly requires differentiated services that users can actually feel, beyond just fees.”
The Dark Side of Cutthroat Competition
As benefit competition among exchanges intensifies, concerns are emerging within the industry. While trading customers enjoy reduced costs, the fact that fees constitute the vast majority of exchange revenue raises concerns about market distortion. Based on last year’s figures, fees accounted for 100% and 99.99% of operating revenue at Coinone and DigitalX, respectively. Upbit and Bithumb also derive 96–100% of revenue from fees.
Some observers believe this competitive landscape is likely to persist for the time being, given the virtual asset taxation scheduled to take effect in January next year. Exchanges need to attract as many investors as possible before the tax regime begins. Starting January 1 next year, income generated from transferring or lending virtual assets will be classified as miscellaneous income and subject to taxation. A total tax rate of 22%—comprising 20% miscellaneous income tax and 2% local income tax—will apply to annual virtual asset income exceeding the basic deduction of 2.5 million won (approximately $1,800).
Meanwhile, at the National Assembly on the same day, lawmakers criticized the government’s virtual asset taxation framework as still inadequate. At a forum co-hosted by Democratic Party lawmaker Moon Jin-seok and the Digital Asset Exchange Alliance (DAXA), Park Jong-soo, a professor at Korea University Law School, said, “Income classification needs to be established for seven transaction types, including mining, staking, lending, and liquidity provision (LP).” He added, “Given the high price volatility of virtual assets and the fact that profit realization can occur over extended periods, a loss carryforward deduction mechanism should be introduced.” Kim Kyung-ha, a professor in the Department of Finance, Accounting, and Taxation at Hanyang Cyber University, argued that “infrastructure must be built to continuously accumulate acquisition cost information.”
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Source: finance.biggo.com