5-9-2025 – South Korea’s Financial Services Commission has introduced new regulations for cryptocurrency lending on centralized exchanges, effective immediately. The guidelines, detailed in an FSC press release, outline the boundaries of lending operations by drawing on international examples and emphasizing user safeguards.
Key restrictions include banning loans that leverage beyond collateral value and imposing a 20% ceiling on interest rates. Platforms are also barred from offering products requiring cash repayments, which the FSC views as infringing on credit laws. Operators must fund these services with their own capital and cannot use external parties to bypass the rules.
To enhance protection, the rules cap individual lending amounts according to users’ trading expertise and history, while requiring advance alerts for potential liquidations. Lending is confined to the 20 largest cryptocurrencies by market cap or those listed on at least three licensed domestic exchanges; services must cease for any asset flagged as risky by platforms.
This framework follows the FSC’s August 19 directive halting lending activities at exchanges like Upbit and Bithumb amid their recent service rollouts. Regulators will monitor compliance through the Digital Asset Exchange Alliance, with plans to formalize the rules into law depending on early outcomes.
