Next month, South Korean financial authorities are set to introduce new regulations for crypto lending amidst growing concerns over investor safety.
Creation of Crypto Lending Task Force
On Thursday, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) announced the establishment of a joint task force aimed at creating a comprehensive framework for crypto lending operations. This decision comes in response to the recent implementation of high-leverage lending services by local exchanges, including Upbit and Bithumb.
Investor Protection Measures
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 that amounted to 80% of users' asset value. Regulators expressed concern over the lack of investor safeguards in such high-risk offerings, particularly given the volatile nature of the cryptocurrency market.
Broader Context of Digital Asset Regulation
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. The upcoming guidelines are expected to be informed by global best practices, traditional stock market rules, and the unique dynamics of the domestic crypto industry.
This development is part of a larger initiative by South Korea to enhance oversight in the cryptocurrency space to ensure greater transparency and investor protection.
