Bithumb Designated Conglomerate by South Korea's FTC

The South Korean Fair Trade Commission (FTC) has designated the cryptocurrency exchange Bithumb as a conglomerate, a move that will subject the company to a range of financial compliance rules. This designation comes as part of the FTC's efforts to regulate large business groups, known as chaebols, which have significant influence in the country's economy. Bithumb was one of five companies added to the FTC’s list of conglomerate companies and business groups on May 1.

South Korea has two categories for conglomerates: "large conglomerates" and "conglomerates." The "large conglomerate" category is subject to the strictest level of public disclosure regulations, requiring companies to post regular reports on the status of their stock holdings and comply with strict expropriation rules for directors and their family members. The "conglomerate" category, on the other hand, must adhere to investment and cross-holding rules to prevent powerful companies from buying significant quantities of shares in stock exchange-listed firms.

Bithumb's designation as a conglomerate means it will face restrictions on its activities, such as making equity investments or loan guarantees with its affiliates and subsidiaries. This move is part of a broader effort by the FTC to regulate the crypto sector, which has seen a sharp rise in trading volumes in recent years. The FTC explained that both Bithumb and its rival Upbit were placed on the list due to the significant increase in crypto trading in late 2024, particularly around the time of the US Presidential Election, when the volume of customer deposits on domestic exchanges increased rapidly.

The FTC's rulings on crypto exchanges have attracted criticism from some detractors who argue that it is difficult to accurately calculate the worth of firms’ total asset holdings, as most exchanges hold more crypto than fiat. Despite this, the FTC's designation of Bithumb as a conglomerate is a significant step in regulating the crypto sector and ensuring compliance with financial regulations.