Gopax Sets Quarterly Rate at 1.3%... Upbit and Bithumb Expected to Announce Tomorrow

5 Major Exchanges Likely to Disclose Customer Deposit Usage Fees by the 19th, the Day the Virtual Asset Act Takes Effect

Gopax became the first among the top 5 virtual asset exchanges to disclose the user deposit fee rate. Photo by Gopax Notice Capture

With the enforcement of the Act on the Protection of Virtual Asset Users (Virtual Asset Act) just one day away on the 19th, Gopax has become the first among the top five exchanges to disclose the usage fee rate, which is equivalent to interest on user deposits. Other exchanges are also expected to reveal their rates by tomorrow, the day the law takes effect.

According to the virtual asset industry on the 18th, Gopax set the pre-tax usage fee rate for customer deposits at 1.3% through consultations with Jeonbuk Bank. The usage fee will be paid quarterly, within 10 business days of the following month each quarter. A 15.4% withholding tax on interest income will be deducted from the usage fee.

Gopax stated, "The usage fee accrual point is from the day after the Korean won points are credited to the user’s account," and "The deposit reference amount is based on midnight." However, due to the nature of the managed products, on weekends, public holidays, and substitute holidays, the deposit balance will be based on the previous business day.

The other four exchanges are also expected to disclose their usage fee rates by tomorrow. Upbit, the leading domestic exchange by market share, announced on the 16th through a notice that "additional matters related to the payment of usage fees and compliance with the Act on the Protection of Virtual Asset Users will be provided in separate announcements," but has yet to reveal specific usage fee rates. As of 2023, Upbit’s 'deposits liability' item, corresponding to customer deposits, reached 3.828 trillion KRW. Among the top five exchanges, Upbit was the only one to receive interest from its contracted bank, K Bank, on deposits, but due to violations of the current Act on the Regulation of Similar Financial Transactions, it was unable to pay usage fees to customers. Amid controversy, the interest income has been used for Environmental, Social, and Governance (ESG) activities.

Bithumb also announced that it signed a user deposit management contract with NH Nonghyup Bank and plans to pay profits to customers. Although the usage fee rate has not yet been announced, it is expected to be around 1%. The payment cycle is estimated to be quarterly. Korbit plans to pay usage fees monthly. According to Korbit’s disclosure, usage fees will be paid on the third business day of each month (excluding statutory holidays). Specific rates have not been disclosed. Coinone is in a similar situation.

From July 19, following the enforcement of the Virtual Asset Act, the payment of usage fees on user deposits by the top five virtual asset exchanges will be mandatory. The Virtual Asset Act, the first industry-specific law, provides a legal basis to protect users and establishes a regulatory framework to address unfair trading practices such as market manipulation.