Seoul, Wednesday, August 28, 2024 – South Korean banks are resisting pressure to join a “deposit rate war” sparked by the nation’s leading crypto exchanges, which are competing fiercely to attract customers with higher interest rates.
Despite the scramble among crypto platforms, banks see little incentive to respond aggressively.
The Virtual Asset User Protection Act, enacted last month, requires crypto exchanges offering fiat trading to manage customer deposits in dedicated bank accounts and pay interest on cash deposits.
However, exchanges can set their own interest rates, leading to intense competition.
Major exchanges like Upbit, Bithumb, Korbit, and Coinone have been raising rates rapidly, with Coinone offering as high as 2.5%.
However, some industry reports warn that as fintech advances, investor funds could shift to more favorable sectors, potentially increasing pressure on banks to respond. Notably, Kookmin Bank has reportedly convinced Bithumb to switch from its partnership with NongHyup, aiming to attract younger clients.
