South Korea Implements Crypto Lending Restrictions for Investor Safety
south Korea’s Financial Services Commission (FSC) recently introduced new crypto lending rules to protect investors and stabilize the market.
The new framework bans high-risk leveraged loans and sets a 20% cap on annual interest rates. Major exchanges now operate under strict self-regulation via DAXA.
This decision comes after a month of increasing pressure. Authorities inspected exchanges and ordered a temporary service suspension in August.
- New rules clarify cryptocurrency lending practices
- leverage and cash-equivalent lending are prohibited
- Exchanges must use their own capital for lending
The guidelines ensure platforms do not act as intermediaries between users or source from unknown third parties.
To safeguard users, the FSC mandates online training for first-time borrowers and implements a tiered lending limit based on trading history.
Exchanges must now provide advance warnings of forced liquidations and allow additional collateral postings.
For market stability, lending is limited to top 20 cryptocurrencies by market capitalization or those on at least three Korean won-based exchanges.
Exchanges are obliged to disclose real-time data on lending volumes, collateral status, and monthly reports on forced liquidations.
