Chinese crypto exchange Huobi may join the race for Bithumb, South Korea’s biggest cryptocurrency exchange, as strict trading rules deter many potential local bidders.
Shareholders of Bithumb Holdings, which owns Bithumb, are selling their entire stake in the crypto exchange, industry sources said on Monday (November 16).
Market insiders are closely watching for possible buyers, because many are hesitant to participate in the deal due to a negative perception of crypto-trading in South Korea.
New guidelines state that investors cannot trade in cryptocurrencies through virtual accounts that have been opened in banks, as they need to be changed to standard accounts using actual names. Cryptocurrency exchange operators also have to provide banks with customer information in order to get real-name accounts from banks.
Huobi is reportedly among potential buyers that have conducted due diligence for the Bithumb deal. Founded in 2013, Huobi is based in Beijing, but has expanded its business to include South Korea, Singapore, Japan, Hong Kong and the U.S.
Only four cryptocurrency exchanges – Bithumb, Korbit, Upbit and Coinone – have real-name bank account systems. Other exchanges are expected to face difficulty in getting real-name accounts from banks due to the conservative nature of the banking industry.
Industry sources said Huobi will try to overcome this barrier by acquiring Bithumb.
“Under the new guideline, the fate of crypto exchanges is in banks’ hands,” said an industry source. “Given the public opinion on cryptocurrency trading, it won’t be easy for them to get real-name accounts from banks.”
An unnamed broadcasting equipment company has also reportedly joined the bidding contest in an effort to enhance its competitiveness after recently expanding into cryptocurrency and blockchain.
It is highly likely that Bithumb Holdings will sign a stock purchase agreement with a potential buyer by the end of this year, an industry source said.
Bithumb Holdings’ current shareholders comprise DAA, with a 30% stake, BTHMB Holdings (10.7%), Vidente (34.24%) and others with a combined 25.06% stake. (Reporting by Byung-yoon Kim)