Bithumb Halts MERL for Upgrade: South Korea's Crypto Regulation Tightrope

Bithumb, South Korea's leading cryptocurrency exchange, has temporarily suspended deposits and withdrawals for Merlin Chain's MERL tokens to facilitate a critical network upgrade. The suspension, effective from 4:55 a.m. UTC, aims to ensure a secure and seamless transition during the upgrade process, which is expected to enhance the blockchain's functionality, security and scalability.

The move underscores the exchange's alignment with South Korea's stringent regulatory framework, which has intensified scrutiny of crypto platforms in recent months. The Financial Intelligence Unit (FIU), the country's financial watchdog, has been imposing heavy penalties on major exchanges for anti-money laundering (AML) and Know Your Customer (KYC) violations. Bithumb joins Upbit (operated by Dunamu), Korbit, GOPAX, and Coinone in facing regulatory action, with fines and operational restrictions becoming a recurring theme in the sector.

The FIU's enforcement efforts follow a "first-in, first-out" approach, with inspections and penalties applied in the order they were conducted. Dunamu, which operates Upbit, was fined 35.2 billion won ($26 million) in November 2025 after earlier receiving a three-month suspension of new customer onboarding for AML lapses. Industry observers anticipate similar sanctions for Bithumb, particularly given its recent additional scrutiny over order book operations.

For Bithumb users, the MERL suspension means deposits and withdrawals are temporarily halted, though trading of MERL against other cryptocurrencies continues uninterrupted. The exchange has emphasized that existing holdings remain secure and that the upgrade will ultimately deliver long-term benefits, including faster transaction speeds, enhanced security features, and improved scalability to meet growing demand.

The timing of the suspension also reflects broader regulatory pressures in South Korea, where policymakers are balancing innovation with oversight. While the government has delayed its crypto tax regime until 2027, it remains committed to enforcing strict compliance standards. The FIU's ongoing enforcement actions signal a commitment to aligning crypto markets with traditional finance's regulatory rigor, a posture that has both challenged and legitimized the industry.

Bithumb has not yet announced a specific timeline for resuming MERL services but pledged to inform users via official channels, including its website, social media, and mobile app notifications. Users are advised to monitor these updates, as the suspension could last from hours to days depending on the complexity of the upgrade.

The suspension highlights the delicate interplay between technological progress and regulatory demands in the crypto sector. While temporary inconveniences may arise, such measures are increasingly seen as necessary to foster trust and stability in digital asset markets.