Over the last year, South Korean cryptocurrency exchanges have made headlines by paying their customers a staggering $87 million in interest on fiat deposits. This development, reported by the South Korean news outlet Yonhap, highlights a significant shift in the region’s crypto market, driven by regulatory changes that have transformed how exchanges operate. The data was made available following a freedom of information request by lawmaker Heo Young from the ruling Democratic Party, underscoring the growing scrutiny around this rapidly evolving sector.
With the official launch of the Virtual Asset User Protection Act in July 2022, South Korea’s five main fiat-trading platforms—Upbit, Bithumb, Coinone, Korbit, and GOPAX—have been compelled to offer fair interest payments to users who deposit their fiat currencies on their exchanges. Previously, these platforms offered meager annual interest rates of about 0.1%. However, the new law ignited fierce competition among exchanges, prompting them to lure customers with exceptionally high interest rates paid quarterly.
This competitive surge led to extraordinary offers, with Bithumb famously announcing a whopping 4% interest rate on deposits only to retract it a mere six hours later. Such volatility in interest rates has kept users on their toes, resulting in a fluctuating landscape where platforms continuously adjust their offerings. As of late June, the interest rates saw some significant revisions, with Upbit and Korbit both at 2.1%, Bithumb at 2.2%, Coinone at 2.0%, and GOPAX trailing behind with a 1.3% rate. Yet, even the lowest rate was still significantly above the typical 1% offered by conventional banks.
A growing number of seasonal foreign workers are vanishing from job sites across rural Korea, deepening concerns among local governments. The disappearances are straining a national program that brings in short-term laborers from overseas.https://t.co/96ajzRxMOe— The Korea JoongAng Daily (@JoongAngDaily) July 25, 2025
However, recent economic developments are casting a shadow on these attractive interest rates. With the Bank of Korea recently cutting base interest rates, exchanges are responding accordingly. Korbit has lowered its usage fee rate to 1.9% this month, while Coinone announced a decrease to 1.77%, effective next month. This indicates a shift towards a more stable environment in the face of changing economic policies.
Looking ahead, the Financial Supervisory Service (FSS) is keen on establishing a clear standard for interest payment calculations to ensure a healthy competitive market. Lawmaker Heo Young stresses that while the Virtual Asset User Protection Act provides crucial safeguards for users, there remains a concerning concentration of capital within certain exchanges. For instance, Upbit commands a market share exceeding 60%, raising questions about monopolistic practices in the crypto exchange landscape.
Heo reassures the public, stating, “We will continue to build upon this law to enhance user protection and nurture a vibrant, competitive ecosystem.” As the cryptocurrency market in South Korea evolves, it will be fascinating to observe how regulations shape competitive dynamics and interest rates, ultimately impacting user satisfaction and security in the crypto space.
To stay updated on developments in the cryptocurrency world, you can follow CoinDesk or The Block. These platforms consistently provide in-depth coverage and analysis of major events shaping the future of digital currencies.