[INTERVIEW] Bithumb set for another leap in cryptocurrency exchange to win back customers
SEOUL — In a country where regulators are reluctant to officially recognize digital currency or virtual currencies as a general medium of exchange, Bithumb, a major cryptocurrency exchange in South Korea, is ready for a new takeoff with a revamped system to win back customers who have complained of high fees, rude service, and sporadic server outages.
Since its founding in 2014, Bithumb has been plagued by frequent hacker attacks, as well as crackdowns and investigations for suspected tax evasion, investment fraud, and other illegal activities. As a result, Bithumb saw the number of registered users jump from eight million to 6.5 million, ranking second after Upbit operated by Dunamu, which is one of South Korea’s most popular startups.
After going through tough times, Bithumb is following its own path to restore public trust and facilitate enjoyable transactions of blockchain-based investment assets. “I think it’s more useful to maintain genuine services,” said CEO Heo Back-young, who has worked to improve anti-money laundering (AML) policy and internal controls. of Bithumb since taking the helm in May 2020.
Heo’s policy paid off, resulting in record sales of more than one trillion won ($832 billion) in 2021. ‘company to solve the lack of internal technology,” Heo said in an interview with Aju Business Daily, citing the platform’s slowness as the “most regrettable” thing. In January 2022, Bithumb was able to double the speed of mobile app transactions and improve user experience and user interface, attracting positive response from customers.
“I think high trading volume and increasing trading convenience are different. Accelerating and improving user experiences so that investors can use the service conveniently is the most fundamental service. That the number of membership increases or not, it is necessary to provide quality services,” Heo said.
Heo said his goal in 2022 is not to increase market share, but to facilitate pleasurable transactions of blockchain-based investment assets. “In terms of operation, of course, it is important to increase market share. I think it is more valuable to maintain authentic services than to know who is the No. 1 player in the market and what Marlet.”
“The business essence of virtual currency exchanges is always to increase user convenience and provide good coins,” Heo said, adding that his company has hired professionals with traditional finance compliance experience to comply with financial regulations. Bithumb and two other national cryptocurrency exchanges – Coinone and Korbit – have created a joint venture called CODE to develop a “travel rules” system.
CODE’s travel rule solution is characterized by not storing transaction records and customer information on the central server using blockchain technology. An intuitive address lookup method has been adopted to verify identification based on address information even if the other exchange or recipient name is not known, greatly reducing the risk of misdeposit.
“We will aggressively push for partnerships with many domestic and overseas companies through CODE’s solution which has strengths in connectivity and scalability,” said Cho Sin-geun, a Bithumb executive in charge of business cooperation, promising to link CODE with other solutions.
The Financial Action Task Force (FATF), an intergovernmental organization that develops anti-money laundering policies, has proposed “travel rule” principles that require the immediate and secure sharing of transaction data and personal identification between virtual asset service providers. To address the travel rule that will be enforced in South Korea in March, VerifyVASP has been introduced as a decentralized travel rule messaging protocol to facilitate compliance with travel rule requirements across all jurisdictions in a cost effective and efficient manner. accessible.
“The system being developed in South Korea is just a tool to properly implement the FATF recommended travel rules system,” Heo said. “In order to have a travel rules system in a complete sense, CODE and VerifyVASP must go through interworking.”
There was no change in the government’s stance, with regulators calling for strong action to prevent irrational and excessive speculative investment. Cryptocurrency exchanges and lenders often profit from interest or fees by granting loans or lending coins to merchants. As the chance of winning more increases, the risk of losing more also increases, as trading sometimes experiences extreme swings and exchanges are frequent targets for hacks.
Heo advocates clear guidelines and a negative regulatory system to promote the virtual asset industry in South Korea. “With the exception of illegal activities such as market disruption and unfair practices, this is the area that needs negative regulation. We need clear guidance from financial authorities to reduce confusion among investors so that the same regulations can be applied to the same services such as travel rules.”
Starting January 26, Bithumb is implementing a pre-registration policy for virtual asset withdrawal addresses. Virtual assets can only be sent to safe and vetted exchanges that have completed their anti-money laundering risk assessment. Currently, there are 32 domestic exchanges and 13 foreign exchanges that can withdraw money from Bithumb.
“As the virtual asset industry grows, the importance of anti-money laundering becomes increasingly important. The whitelist system chosen by Bithumb is a policy that only sends coins to recipients identified,” Heo said, adding that Bithumb would take steps to address concerns that the company’s whitelisting policy would cause inconvenience to investors.
The Seoul government has presented a new national strategy to catapult South Korea into a major player in the global metaverse market. The metaverse is a shared virtual collective space, created by the convergence of a virtually augmented physical reality and a physically persistent virtual space. Various South Korean companies have actively adopted metaverse platforms to bridge the gap between online and offline spaces.
Bithumb is interested in new ventures related to metaverses and non-fungible funds (NFTs), Heo said, calling for a thoughtful approach to doing business with those who clearly aim to issue NFTs.
“We are currently having a positive discussion with an entertainment company. NFT and the metaverse are certainly good things, but it is unfortunate that companies do not have specific business objectives, but are content to first enter in the market. Bithumb is going through the stage of thinking about what will work most importantly in the metaverse world going forward.”
(This story is based on an interview in Korean conducted by Aju Business Daily reporter Suh Min-ji)
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