South Korea’s financial regulator has ordered a stop to all crypto lending on local exchanges, saying the fast-growing products lack proper rules and pose risks.
Reports say the order is an administrative step, not a criminal ban, but platforms that ignore it may face on-site inspections from authorities.
South Korea confirms that the only “investment” the U.S. is getting out of them is in the form of high interest rate loans.
One company’s first month drew roughly 27,600 investors who borrowed about 1.5 trillion won ($1.1 billion), according to the regulator. Market swings pushed about 13% of those borrowers into liquidation, the FSC added.
Forced liquidations and a sudden rush to sell can magnify losses for ordinary users, which is exactly what alarmed regulators. That mix of heavy borrowing and market stress is what the FSC flagged as a systemic worry.
Upbit and Bithumb had already paused lending once in July; Bithumb later resumed under stricter terms before this fresh suspension.
Officials say they will move quickly to build a clear rulebook for digital asset lending to protect users and keep markets steady.
South Korea appears to be loosening other curbs: authorities are clearing the way for the country’s first spot crypto ETFs and are working on a won-pegged stablecoin framework.
That shows regulators want to encourage safer forms of crypto access, while trimming riskier retail products.
Featured image from Verdict, chart from TradingView
