South Korea's financial regulators, including the Financial Services Commission and the Financial Supervisory Service, have raised concerns regarding leveraged lending services, prompting adjustments at crypto exchanges.
Exchange Responses to Regulatory Measures
In response to the regulators' concerns, Upbit suspended USDT lending while Bithumb maintained its controversial 4x leverage ratio. Regulators highlighted increased systemic risks associated with these offerings.
In response, Bithumb revised its product while not changing the leverage capacity, whereas Upbit completely suspended high-leverage services.
CITE_W_A: "We plan to establish a task force with the industry to draft voluntary self-regulation measures for crypto lending and margin trading." - Kim Joo-hyun, FSC Chairman.
Historical Context of Crypto Market Regulation in South Korea
South Korea's efforts to limit leverage in crypto markets echo past restrictions on traditional financial products, such as the 2x cap on ETFs. This demonstrates a consistent regulatory approach aimed at managing systemic risks.
Future of Crypto Lending Regulation
Industry analysts warn that such regulatory scrutiny could drive users to platforms in jurisdictions with weaker compliance. The Coincu research team anticipates that continued regulatory focus could result in reforms influencing not only leverage products but also spur better industry self-regulation practices.
Current measures from South Korean regulators highlight the need for control over crypto markets, which may influence investment directions and the operations of local platforms.
