South Korea Cracks Down on Crypto Loans: No Leverage, No Fun, No Problem

by

Well, it seems like South Korea’s regulators have decided that crypto exchanges need a firm chat about their behavior, and they’re not having any of it. No more high-risk leveraged loans, no more wild interest rates. Instead, there’s a shiny new 20% cap on the interest rate, as the country tries to keep investor wallets (and possibly sanity) intact. After all, you can’t have a proper market if everyone’s just winging it, can you? 😏

  • South Korea’s Financial Services Commission (FSC) has banned leveraged crypto lending and slapped a 20% cap on interest rates. No more risky business, folks!
  • The new rules come with a neat little self-regulation club-DAXA-where the major exchanges must behave and protect users. It’s like a crypto school, but with more rules and fewer field trips. 📚

On the fine, fine day of September 5 (mark it on your calendars, people), the FSC unveiled its new master plan to get crypto lending under control. It’s like a set of rules for a game no one actually wanted to play. Exchanges, through their self-regulation squad-DAXA-have now been told to stop offering leveraged loans and cap those sweet interest rates at 20%. All this comes after a month of regulators breathing down their necks like overzealous parent chaperones. 😬

The guidelines, drafted by a crack team of task force specialists, aim to fix what they called “legal inadequacy” and the slightly too enthusiastic “intensification of competition.” Which is just a fancy way of saying, “you guys need to calm down before we all get hurt.” 😅

South Korea Sets Boundaries: Crypto Lending, You Shall Not Pass

The new guidelines draw a *very* clear line in the sand, and that line says, “Leverage? Nah, that’s not allowed.” If you’re thinking of borrowing more than your collateral is worth, think again. It’s like borrowing your friend’s car and trying to race it on a Formula 1 track. Spoiler alert: It doesn’t end well.

Oh, and if you’re into the whole “cash-equivalent lending” business (where you could repay loans in tokens that are somehow *immune* to market fluctuations), well, that’s been officially banned. No more pretending the market isn’t fluctuating-regulators are onto you. 😏

The FSC also laid down the law by requiring exchanges to use their own capital for lending operations. No more acting as shady middlemen, sourcing assets from “mysterious” third parties to artificially juice those returns. Time to face the music, people! 🎵

Guardians of User Protection and Market Stability

In an attempt to protect those poor, unsuspecting souls who think they can waltz into crypto borrowing without a clue, the FSC’s new rules have created a mandatory online training module for first-time borrowers. Because, clearly, crypto is *not* a game you should just dive into without some sort of tutorial, right? 🎮

On top of that, borrowers will now face a tiered lending system, where your borrowing limit will depend on your past crypto history. So, if you’ve been a responsible trader, you might get to borrow a little more. But if you’ve been a wild card, well, you’re not going to get much more than a polite “no” and a cautionary tale. 🙄

Oh, and if you’re getting close to being liquidated (which is crypto-speak for “We’re taking your stuff now”), exchanges have to warn you in advance. You can even add more collateral if you need to. A little bit of a safety net, because we all know how *fun* forced liquidations are. 😬

For market stability (as if crypto markets are known for their stability), the FSC is focusing on asset quality. In other words, only the *good* tokens are allowed to play in this sandbox. No more risky tokens slipping in under the radar. And exchanges must now publicly disclose all sorts of data-lending volumes, available balances, and forced liquidations. Everyone’s getting an open book, folks. 📖

Read More

2025-09-05 18:22