South Korean exchange Bithumb has tightened the rules on its recently launched crypto lending service by halving leverage and significantly lowering loan limits to address investor risk concerns.
On Monday, the exchange announced the resumption of its crypto lending service, which had been suspended since July 29 due to “insufficient lending volume,” according to the South Korean newspaper Kookmin Ilbo.
“After a thorough review of the service, we have made some adjustments to protect investors and enhance service quality,” Bithumb stated. The maximum leverage ratio was reduced from 4x to 2x, and the maximum loan amount was slashed from 1 billion won ($726,000) to 200 million won ($145,000), an 80% decrease.
This new borrowing limit applies even to investors with over 100 billion won ($72 million) in cumulative trading volume over the past three years, the report added.
South Korea establishes task force to oversee crypto lending
On July 31, South Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) established a task force in collaboration with the Korea Institute of Finance and local exchanges to develop “Virtual Asset Lending Service Guidelines.”
The task force includes representatives from the FSC, FSS, and the Digital Asset eXchange Alliance (DAXA), which represents the country’s five largest exchanges. Drawing from international standards, stock market regulations, and the unique aspects of South Korea’s crypto market, the group aims to create rules addressing leverage limits, asset eligibility, and risk transparency.
Authorities have also urged exchanges to reevaluate high-risk or legally unclear services, especially those involving excessive leverage or fiat-backed loans.
Before restarting its lending service under the new restrictions, Bithumb reportedly reviewed its terms with regulators.
More than a quarter of South Koreans aged 20 to 50 own cryptocurrency
According to a report from the Hana Institute of Finance, more than one in four South Koreans aged 20 to 50 own cryptocurrency, with crypto making up an average of 14% of their financial portfolios. Ownership is highest among those in their 40s at 31%, followed by people in their 30s and 50s.
The report also highlights a shift among South Korean retail investors from US Big Tech stocks to crypto-related equities. Their share of the top 50 net-bought stocks rose from 8.5% in January to 36.5% in June, before slightly declining to 31.5% in July.
