South Korea Suspends Crypto Lending On Exchanges

The Financial Services Commission of South Korea has instructed local cryptocurrency exchanges to suspend their lending services, citing regulatory uncertainty and risks to investors. The directive comes after platforms like Upbit and Bithumb launched popular products allowing customers to borrow Korean won or crypto against their deposits—sometimes up to four times the collateral value.

Within just a month, 27,600 people borrowed about $1.1 billion. However, sharp price swings forced 13% of borrowers to liquidate their holdings, sparking concerns about systemic risks. The FSC further noted that USDT lending had triggered waves of sell orders that drove stablecoin prices unusually low across Korean markets.

While borrowers can extend or repay existing loans, exchanges have been banned from offering new lending products until comprehensive guidelines are established. The decision underscores the regulator’s caution in balancing innovation with financial stability in South Korea’s fast-evolving crypto market.

You need to login in order to Like