{"id":47403,"date":"2025-09-05T20:54:10","date_gmt":"2025-09-05T13:54:10","guid":{"rendered":"https:\/\/hbbgroup.net\/south-korea-caps-crypto-lending-rates-at-20-bans-leveraged-loans\/"},"modified":"2025-09-05T20:54:10","modified_gmt":"2025-09-05T13:54:10","slug":"south-korea-caps-crypto-lending-rates-at-20-bans-leveraged-loans","status":"publish","type":"post","link":"https:\/\/hbbgroup.net\/vi\/south-korea-caps-crypto-lending-rates-at-20-bans-leveraged-loans\/","title":{"rendered":"South Korea caps crypto lending rates at 20%, bans leveraged loans"},"content":{"rendered":"
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South Korea\u2019s Financial Services Commission introduced new rules for crypto lending, banning leveraged loans, capping interest at 20% and restricting use to the top coins. <\/p>\n

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South Korea\u2019s Financial Services Commission (FSC) set new rules for crypto lending.<\/p>\n

The FSC said<\/a> on Friday that interest on crypto lending is now capped at 20% in South Korea<\/a>, and leveraged lending is not allowed. Crypto lending is restricted to the top 20 tokens by market capitalization or those listed on at least three won-based exchanges.<\/p>\n

The new rules follow late July reports that South Korea\u2019s financial regulators had plans to release guidelines on cryptocurrency lending<\/a> services to tighten oversight and protect investors. The move also followed the introduction of leveraged lending services by local crypto exchanges.<\/p>\n

The FSC noted that the review of the rules was triggered by a request from financial services, given the lack of regulations for lending. Now, exchanges must also ensure that first-time borrowers have completed online training and suitability tests set by the local self-regulatory organization, the Digital Asset eXchange Alliance (DAXA).<\/p>\n

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South Korea\u2019s Financial Services Commission. Source: <\/em>Wikimedia<\/em><\/a><\/figcaption><\/figure>\n

Related: <\/strong><\/em>South Korea readies stablecoin framework; bill set for October<\/strong><\/em><\/a><\/p>\n

More transparency, fair practices<\/h2>\n

In the event of forced liquidations, users must be notified in advance, and adding capital to a position to avoid liquidation must be permitted. Lastly, exchanges must use their own capital to provide lending services:<\/p>\n

\u201cIndirect lending through third-party collaborations or outsourcing is banned to prevent regulatory evasion.\u201c<\/p><\/blockquote>\n

\u201cThe new regulations reflect South Korea\u2019s increasingly critical stance toward crypto. Lee Eok-won, the nominee for chairman of the FSC, recently made critical remarks about cryptocurrency<\/a>, noting that \u201ccrypto has extreme price volatility, lacks monetary function\u201d and has \u201cno intrinsic value.\u201d<\/p>\n

According to reports from late July<\/a>, the level of scrutiny is expected to increase. At the time, South Korea\u2019s central bank was reported to be launching a virtual asset committee to monitor the crypto market.<\/p>\n

Still, crypto is gaining popularity in South Korea at a rapid pace.<\/p>\n

Related: <\/strong><\/em>South Korea orders exchanges to halt crypto lending services<\/strong><\/em><\/a><\/p>\n

South Korea\u2019s youth bets on crypto<\/h2>\n

A recent report indicates that wealthy families and family offices across Asia are increasing their cryptocurrency allocations, with some planning to allocate about 5% of their portfolios<\/a> to the asset class. Data from the end of March showed that\u00a0crypto exchange users in South Korea have surpassed 16 million<\/a>, following a surge in their numbers after the election of pro-crypto US President Donald Trump.<\/p>\n

The number of users is equivalent to more than 30% of South Korea\u2019s total population. Still, some suggest that this is a consequence of financially hopeless local youth seeking easy money, rather than embracing the technology.<\/p>\n

In late June, Eli Ilha Yune, chief product officer at quantum machine learning startup Anzaetek, suggested that the \u201cmotive comes not from [\u2026] a belief in Web3 [\u2026] like in the West.\u201d He said that South Korean crypto adoption is a\u00a0consequence of the financial desperation<\/a>\u00a0afflicting the younger generation.<\/p>\n

Magazine: <\/strong><\/em>South Koreans dump Tesla for Ethereum treasury BitMine: Asia Express<\/strong><\/em><\/a><\/p>\n