The recent classification of Bithumb, a popular South Korean crypto exchange, as a conglomerate by the Fair Trade Commission (FTC) has sparked discussions within the financial community. This designation will require Bithumb to comply with a series of financial compliance regulations that are typically reserved for larger conglomerates in the country.
The South Korean government has two distinct categories for conglomerates – “large conglomerates” and “conglomerates.” The former category is subject to the most stringent public disclosure regulations, requiring companies to provide detailed reports on their stock holdings and adhere to strict expropriation rules for directors and their family members. On the other hand, companies classified as “conglomerates” must follow investment and cross-holding regulations to prevent powerful entities from exerting undue influence in the market.
Bithumb joins a select group of companies that have been added to the conglomerate list this year, including LIG, Daekwang, Sajo, and EUKOR. This move by the FTC reflects the increasing scrutiny on large corporations, especially in the wake of the rapid growth of the crypto industry in South Korea.
The decision to classify Bithumb as a conglomerate comes after a significant surge in crypto trading in late 2024, coinciding with the US Presidential Election. The FTC cited a sharp increase in customer deposits on domestic exchanges during this period, leading to a reevaluation of the regulatory framework for crypto exchanges.
Critics of the FTC’s rulings on crypto exchanges argue that the agency’s calculations of firms’ total asset holdings may not accurately reflect the value of their crypto assets, given that most exchanges hold more digital assets than fiat currency. This discrepancy raises concerns about the accuracy of the evaluations conducted by the regulatory body.
Overall, the designation of Bithumb as a conglomerate underscores the growing importance of regulatory oversight in the crypto industry. As the market continues to evolve and expand, it is crucial for regulators to adapt their frameworks to ensure the stability and integrity of the financial system. The decision by the FTC to classify Bithumb highlights the need for comprehensive regulations that can effectively address the challenges posed by the rapidly changing landscape of digital assets.