Charles Esther
South Korean cryptocurrency exchange Bithumb has imposed stricter regulations on its crypto lending service, which was launched just a month ago.
The exchange cut the maximum leverage in half and significantly reduced loan limits to address concerns over investor safety.
Service Resumed After Temporary Suspension
Bithumb restarted its crypto lending service on Monday after suspending it on July 29 due to “insufficient lending volume,” according to South Korea’s Kookmin Ilbo newspaper.
The exchange conducted a full review of the service and made adjustments aimed at protecting investors and enhancing service quality.
Key Changes Include Lower Leverage and Lending Caps
The maximum leverage allowed was reduced from 4x to 2x.
The highest loan amount dropped sharply from 1 billion won (about $726,000) to 200 million won (approximately $145,000), an 80% decrease.
These new limits apply even to large investors who have traded over 100 billion won ($72 million) cumulatively in the last three years.
South Korea Forms Task Force to Regulate Crypto Lending
On July 31, South Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) established a task force.
This group includes representatives from FSC, FSS, the Korea Institute of Finance, and major crypto exchanges under the Digital Asset eXchange Alliance (DAXA).
The task force is working on drafting “Virtual Asset Lending Service Guidelines” based on global standards, local market needs, and stock market regulations.
Focus on Leverage Limits and Risk Transparency
The new rules aim to clarify leverage restrictions, asset eligibility, and improve transparency around risks.
Authorities have urged exchanges to reevaluate services that may be risky or legally unclear, especially those offering excessive leverage or fiat-backed loans.
Bithumb’s Compliance with Regulatory Review
Before resuming its lending operations, Bithumb reviewed its service terms with regulatory bodies and adjusted them accordingly.
Efforts to reach Bithumb for further comment were unsuccessful by the time of publication.
Growing Interest in Crypto Among South Koreans
A report from the Hana Institute of Finance shows that over 25% of South Koreans aged 20 to 50 own cryptocurrencies.
On average, crypto holdings represent 14% of their overall financial portfolios.
The highest crypto ownership is seen in people in their 40s (31%), followed by those in their 30s and 50s.
Shift Toward Crypto-Linked Stocks by Retail Investors
South Korean retail investors are moving away from US Big Tech stocks toward crypto-related equities.
The share of crypto-linked stocks among the top 50 net-bought equities rose from 8.5% in January to 36.5% in June, before slightly dropping to 31.5% in July.
