The Financial Services Commission (FSC) of South Korea has outlined new measures for regulating crypto lending, aimed at protecting retail investors. These rules impose strict limits on lending products offered by exchanges.
Key Changes in Regulations
Under the new rules, interest on crypto loans cannot exceed 20%. This decision aims to enhance protective measures for traders amid increased scrutiny of local platforms.
Loan Restrictions
Exchanges are prohibited from issuing loans that exceed the collateral posted by users. Additionally, products requiring cash repayment have been banned as they resemble unlicensed credit services. If a token is flagged as high risk, lending associated with it must stop immediately.
Responsibilities of Exchange Platforms
The enforcement of the new regulations falls on the Digital Asset Exchanges Association (DAXA). Furthermore, borrowing limits will be determined based on each user's trading history and platforms must provide advance notice before liquidations.
The introduction of these rules marks a significant step towards stricter regulation of the crypto market in South Korea, considering recent announcements regarding the suspension of lending products on major exchanges like Upbit and Bithumb.
