Bithumb, South Korea’s largest cryptocurrency exchange by trade volume, is on a roll lately.
This week, the exchange opened Bithumb Crypto Index (BTCI), which contains two separate indices—Bithumb Market Index (BTMI) and Bithumb Altcoin Market Index (BTAI), news.bitcoin.com first reported.
Bithumb began calculating BTCI last July 1. BTMI tracks all coins listed on the crypto platform with a goal of providing “an overall view of the price changes in the cryptocurrency market,” while BTAI tracks “all non-bitcoin cryptocurrencies” on the platform to give “a view of the price changes in the cryptocurrency excluding bitcoin.” The index is calculated in real time and is updated every 10 seconds, according to Bithumb.
Like Bithumb, Upbit—the largest crypto exchange in South Korea in terms of the number of cryptocurrency listed—also launched two indices: Upbit Market Index (UBMI) and Upbit Altcoin Index (UBAI). From the two indices, Upbit has over 20 sub-indices grouped into either market, theme or strategy.
Upbit was quoted by Business Korea saying, “The index is designed to help investors grasp the movements of the cryptocurrency market at a quick glance.”
Singapore consortium bets big on Bithumb
In addition to launching an index, Bithumb also found itself a new investor.
On Friday, Yonhap reported that the BTC Holdings Company, which has held 75.99% stake in Bithumb, has signed a deal to sell 50% plus 1 share for KRW400 billion ($354 million) to Singaporean blockchain consortium BK Global. This effectively makes BK Global the majority owner of the South Korean crypto exchange.
Once the deal is complete, Bithumb will be valued at more than KRW1 trillion, or around $880 million.
BK Global is described as a Singapore-based medical group that operates plastic surgery and aesthetic clinics in South Korea and Singapore. Its chairperson, Kim Byung-gun, is a “plastic surgeon and blockchain platform investor,” according to Reuters.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Bithumb, South Korea’s second biggest cryptocurrency exchange, has announced plans to bring forward a new decentralised exchange in the coming months, in the wake of a similar move from rival Binance.
Bithumb DEX will target global cryptocurrency markets, and is being developed in partnership with One Root Network, which has already pioneered its own DEX which launched earlier this year, Business Korea reported.
According to sources close to the firm, the move is designed to compete with other cryptocurrency exchanges in targeting a global audience for the cryptocurrency brand.
The report noted, “Bithumb is one of the leading global exchanges in terms of transactions but it is true that most of its users are Korean. The latest decision seems to be the company’s strategy to compete with other leading exchanges in the global market by opening a decentralized exchange that receives attention in the global market.”
Cryptocurrency exchanges like Bithumb are traditionally been centralised, earning fees for the platform operator with each transaction. However, in the case of decentralised exchanges, the central party is removed from the transaction, with fees instead delivered by smart contract.
Discussing the scope for decentralised exchanges to become more prominent in future, Binance CEO Changpeng Zhao said that decentralised exchange technology would eventually overtake centralised exchanges.
“I believe that decentralized exchange is the future. I don’t know when that future will come yet. I think we’re at an early stage for that so I don’t know if it’s a year, two years, three years, or five years. I don’t know but we got to be ready for it,” Zhao told CNBC’s Crypto Trader.
Hester Peirce, a commissioner at the U.S. Securities and Exchange Commission, said that investing through crypto exchange platforms required specialists knowledge many investors lack.
“This complexity means that only a very particular type of investor can pursue the diversification opportunities such assets can provide. Entrepreneurs are developing new products through which people can access cryptocurrencies indirectly or hedge their cryptocurrency holdings. Bitcoin futures, for example, began to trade recently,” Perice said.
Decentralised exchanges only exacerbate this issue, and as such, it is expected to appeal to Bithumb’s savvier customers. On the plus side, the decentralised exchange will improve security, by removing the centralised point of weakness—especially important in light of recent hacks of the Bithumb platform.
Although no specific timeline has been published, the new platform is expected to launch over the next few months.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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This past August, the Ministry for Small and Medium Enterprises (SMEs) and Startups in South Korea delivered a proposal to the government. The proposal included a change to existing laws for the blockchain industry, as well as cryptocurrency exchanges, that would see entities in the spaces be permanently added to the government’s official list of certified venture firms.
Unfortunately for the industry, that proposal has now been shot down. Not only does it mean that the SMEs and startups won’t have access to financial incentives offered to other businesses, but it also means that blockchain-businesses could be on the hook for more taxes.
As it stands now, the majority of the exchanges in the country, including Upbit and Bithumb, are classified as venture firms. Toward the end of next year, however, this classification is set to expire, which can seriously hamper future growth of the industry in South Korea.
When the classification expires, crypto exchanges could see their income and corporate taxes increase by 100%. They would also no longer qualify for a 75% reduction in acquisition taxes and will not have access to any financial privileges, including credit guarantees.
“Under the new government policy, cryptocurrency exchanges that will be newly set up this month or later cannot be certified as venture firms,” asserts the government.
According to an earlier statement by blockchain and crypto lobby groups —including the Korea Blockchain Association, the Korea Blockchain Startup Association and the Korea Industry Promotion Association—“The measure will discourage the industry as a whole.”
Without the tax benefits, there will be little incentive for new players to enter the industry. Startups, and even established businesses, could ultimately pursue moving their operations abroad where the tax liabilities are not so heavy.
Upbit could already be looking to relocate. It opened an office in Singapore earlier this year and is expected to launch operations there in October. In the wake of the government’s denial of the proposal, it’s conceivable that the exchange will pack up and vacate the South Korean market completely. The exchange’s CEO, Sigroo Lee, said about the expansion a month ago, “We felt the timing was right to expand globally despite various uncertainties surrounding the Korean market.”
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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