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South Korea’s second-largest cryptocurrency exchange, Bithumb, has announced the closure of its USDT trading market and the termination of its order-book-sharing partnership with Australia’s Stellar Exchange. The decision came after just two months of operation, reflecting heightened scrutiny from South Korean regulators on anti-money laundering (AML) and Know Your Customer (KYC) compliance standards.
The market shutdown took effect at 11:00 AM on November 28, 2025, impacting ten cryptocurrencies previously tradable against USDT. While USDT trading has been halted, these cryptocurrencies continue to trade against Korean Won (KRW) on Bithumb’s platform.
Regulatory Probe Triggers Closure
The closure follows an investigation by the Korea Financial Intelligence Unit (FIU) that began on October 1, 2025. The regulatory review focused on whether Bithumb’s cross-border partnership with Stellar Exchange could create loopholes in anti-money laundering protocols.
The FIU examined KYC procedures and Travel Rule compliance, particularly concerning collaborations with overseas exchanges that may not meet South Korea’s stringent standards. The Travel Rule mandates that virtual asset service providers collect and share sender and recipient information for certain crypto transactions, a key measure for preventing illicit fund flows.
Authorities feared that the Bithumb-Stellar partnership could allow users to bypass these safeguards through cross-border transactions, raising red flags for regulatory oversight.
Short-Lived Stellar Exchange Collaboration
Bithumb launched the USDT market beta on September 22, 2025, partnering with Stellar Exchange to pool order books and increase liquidity for traders. The collaboration was intended to provide deeper market access by combining trading volumes from both exchanges.
However, concerns arose almost immediately. Reports revealed that BingX staff were working at Bithumb’s Seoul headquarters, raising questions about oversight and regulatory accountability, since Stellar Exchange is a subsidiary of Singapore-based BingX.
South Korea enforces the Act on the Protection of Virtual Asset Users, along with strict rules from the Financial Services Commission, governing asset management, transaction monitoring, and customer protection. The partnership posed complex compliance challenges, particularly in ensuring cross-border AML and KYC adherence.
Impact on Users and Trading Operations
All existing USDT market orders on Bithumb were canceled, and API services connected to USDT trading have been suspended. Users can still trade the affected cryptocurrencies against KRW, and deposit and withdrawal functions remain operational.
In its official notice, Bithumb stated that the closure aims to enhance trading stability and implement system improvements. While the exchange mentioned the possibility of reopening the USDT market, no timeline was provided.
Industry observers, however, view the closure as a direct response to regulatory pressure, rather than a voluntary technical upgrade. Reports indicate that the FIU’s concerns regarding AML and KYC gaps were the driving factors behind Bithumb’s decision.
Wider Implications for Crypto Exchanges
This event highlights the challenges cryptocurrency exchanges face when expanding international operations in jurisdictions with strict oversight. South Korea prioritizes investor protection and financial crime prevention, requiring exchanges to maintain rigorous compliance protocols.
Cross-border partnerships, while beneficial for liquidity and trading depth, introduce regulatory complexity. Exchanges must navigate domestic laws while ensuring foreign partners meet equivalent standards, particularly concerning AML compliance.
Bithumb’s USDT market closure signals that even established platforms are vulnerable to regulatory intervention when venturing into international collaborations, emphasizing the importance of robust compliance infrastructure for global crypto operations.
Conclusion
The shutdown of Bithumb’s USDT market and its partnership with Stellar Exchange serves as a cautionary tale for crypto platforms expanding internationally. While aimed at providing a stable trading environment, the closure primarily reflects regulatory demands on anti-money laundering and KYC practices.
As South Korea continues to enforce strict oversight of digital asset markets, exchanges operating in the country must prioritize compliance and maintain transparency in cross-border collaborations. Traders and investors in affected markets are advised to monitor announcements for potential system upgrades or market reopenings, while the industry at large is reminded of the ongoing regulatory hurdles in global cryptocurrency trading.
