South Korean financial authorities are set to introduce formal regulations on cryptocurrency lending services next month, as the country intensifies its efforts to strengthen investor protection and rein in risky leveraged crypto products.
On Thursday, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) announced the launch of a joint task force dedicated to establishing a comprehensive framework for crypto lending operations. This move comes in response to the recent introduction of high-leverage lending services by local exchanges, including Upbit and Bithumb.
According to reports from Yonhap News Agency, Bithumb has allowed users to borrow up to four times the value of their collateral, while Upbit offered loans amounting to 80% of users’ asset value. The regulators expressed concern over the lack of investor safeguards in such high-risk offerings, especially given the volatile nature of the cryptocurrency market.
The newly formed task force will include representatives from the FSC, FSS, and the Digital Asset eXchange Alliance (DAXA)—a self-regulatory body comprising South Korea’s five major crypto exchanges: Upbit, Bithumb, Coinone, Korbit, and Gopax.
Authorities said the upcoming guidelines will draw on global best practices, traditional stock market rules, and the unique dynamics of the domestic crypto industry. Key focus areas are expected to include setting limits on leverage, defining eligible users and assets, enforcing risk disclosures, and ensuring greater transparency in digital asset lending.
In the interim, regulators have asked exchanges to reevaluate high-risk or legally ambiguous services, particularly those involving excessive leverage or fiat-backed loans.
The crypto lending framework is expected to lay the groundwork for broader digital asset legislation, aligning with South Korea’s wider push to tighten oversight across the crypto space.
This development follows a recent move by the Bank of Korea, which announced the creation of a specialized department focused on cryptoassets, marking a major step in the country’s efforts to regulate digital currencies.
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