Financial Supervisory Service Governor Lee Chan-jin held a roundtable on Sept. 30, his first meeting with the virtual asset industry since taking office. As part of a relay of financial sector roundtables following Lee's inauguration, CEOs of 10 major domestic virtual asset businesses gathered, including virtual asset exchanges such as Dunamu, which operates Upbit, Korbit, Coinone, and Streami, which operates Gopax.
At the meeting, the industry's hot topics were discussed, including the one-exchange-one-bank regulation and spot bitcoin exchange-traded funds (ETFs). Lee was said to have carefully listened to each CEO and expressed a positive intention to back the industry with appropriate regulation as the financial authority.
But there was a virtual asset exchange that was not invited. It was Bithumb, which accounts for nearly 30% of domestic virtual asset trading share. Even before the roundtable was held, talk circulated that Bithumb would be left off the attendee list, but when Bithumb's CEO was nowhere to be seen at the actual venue, everyone in the virtual asset industry was taken aback. That is because much smaller virtual asset exchanges and even corporations that have not yet opened services were invited.
In fact, rumors were widespread that Bithumb had already fallen out of favor with the FSS since Aug. The reason was "lending," a virtual asset rental service that Bithumb had actively marketed. As short selling services that allow users to borrow and sell virtual assets spread like a fad among virtual asset exchanges, the FSS asked the exchanges to hold off until guidelines were issued, and several exchanges scaled back their services.
However, despite the FSS's request, Bithumb kept pushing the service. The FSS even warned that if new business continued despite administrative guidance, it would take all necessary measures, including on-site inspections. While most exchanges halted lending services, Bithumb continued operations by only cutting the lending ratio from four times to two times.
In the end, Bithumb attended once but has since been unable to rejoin discussions on virtual asset lending guidelines, where domestic virtual asset exchanges and industry officials gather. By contrast, other exchanges and the Digital Asset eXchange Alliance (DAXA) have held multiple discussions and cooperated in drafting the guidelines. Bithumb's exclusion from this roundtable is an extension of that stance.
Even in Lee's remarks, there is a sharp criticism felt toward Bithumb. Phrases such as "distorted competition fixated only on short-term performance, such as excessive events and the launch of high-risk products," and "outages caused by human error or poor management continue" bring to mind Bithumb's lending service, its new shared order book with overseas virtual asset exchanges, and the late-night Bithumb outage on the 2nd of last month.
Bithumb has now scaled back and revised its lending service in line with the FSS guidelines. By reducing the maximum virtual asset lending ratio from the previous maximum of 200% to 85%, users will be able to borrow virtual assets up to 85% of their collateral assets going forward. Until now, there had been internal disagreements within management over pressing ahead with services contrary to the FSS's request, but after even undergoing an on-site inspection by the Financial Intelligence Unit (FIU) recently, the company backed down.