Crypto Lending Revives in Korea Despite Stricter Government Rules
Despite tighter oversight from South Korea’s monetary authorities, leverage-driven “crypto lending” providers resurface throughout home exchanges.
Platforms like Upbit, Bithumb, and Coinone are reviving or reshaping the controversial merchandise below newly issued authorities tips, signaling a cautious however notable comeback.
Coinone Launches “Coin Borrowing”
On Monday, Coinone, South Korea’s third-largest cryptocurrency change, launched its new cryptocurrency buying and selling service, “coin lending.” The rollout comes simply two months after opponents Upbit and Bithumb launched related providers in July.
The product lets customers borrow cryptocurrency in opposition to Korean gained collateral, enabling leverage-driven buying and selling methods. In observe, this contains short-selling—borrowing crypto, promoting at market costs, and repurchasing later at a reduction if costs fall.
Coinone emphasised that the service strictly follows the Government’s, i.e., Financial Services Commission (FSC), lending tips. Under the principles, particular person borrowing limits mirror fairness short-selling frameworks—$22,000 (KRW 30 million) to $51,000 (KRW 70 million), relying on the person.
Customers can pledge as little as $37 via the service and borrow as much as 82% of their collateral, topic to the $22,000 cap. At launch, solely Bitcoin is supported.
Upbit and Bithumb Adjust Their Services
Industry chief Upbit reinstated its lending program final week, modifying phrases to fulfill the FSC’s necessities. Its most collateral cap fell by 25%—from $37,000 to $28,000.
Bithumb, the nation’s second-largest change, continues working below its outdated construction however confirmed ongoing revisions.
“We totally perceive the intent of the FSC and the DAXA tips,” a Bithumb spokesperson stated, referring to the Digital Asset eXchange Association. “We are reviewing borrowing limits, ratios, and liquidation necessities to make sure investor safety and market stability. Our precedence is to transition the service easily whereas minimizing person disruption.”
Regulators Push Stronger Safeguards
The FSC launched its guidelines earlier this month in response to issues over investor threat and extreme leverage. Regulators clarified that lending providers should not function as unchecked, high-risk merchandise.
Exchanges should now present loans solely from their reserves and restrict borrowing to large-cap cryptocurrencies. Borrowing limits are capped for every particular person, and customers should full on-line teaching programs and move suitability assessments earlier than accessing the service. To shield retail merchants, authorities additionally set a most annualized rate of interest of 20 % and strengthened disclosure obligations.
Officials stated the framework is designed to strike a stability—permitting innovation in digital asset markets whereas making certain client safety and curbing reckless hypothesis.
According to CoinGecko, six South Korean-based exchanges—together with Upbit, Bithumb, and Coinone—collectively course of $5.26 billion in each day buying and selling quantity.
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