Exchanges handle $5.26 billion daily, highlighting regulators’ cautious stance on leverage.
Despite tighter oversight from South Korea’s financial authorities, leverage-driven “crypto lending” services resurface across domestic exchanges.
Platforms like Upbit, Bithumb, and Coinone are reviving or reshaping the controversial products under newly issued government guidelines, signaling a cautious but notable comeback.
On Monday, Coinone, South Korea’s third-largest cryptocurrency exchange, launched its new cryptocurrency trading service, “coin lending.” The rollout comes just two months after competitors Upbit and Bithumb introduced similar services in July.
The product lets users borrow cryptocurrency against Korean won collateral, enabling leverage-driven trading strategies. In practice, this includes short-selling — borrowing crypto, selling at market prices, and repurchasing later at a discount if prices fall.
Coinone emphasized that the service strictly follows the Government’s, i.e., Financial Services Commission (FSC), lending guidelines. Under the rules, individual borrowing limits mirror equity short-selling frameworks — $22,000 (KRW 30 million) to $51,000 (KRW 70 million), depending on the user.
Customers can pledge as little as $37 through the service and borrow up to 82% of their collateral, subject to the $22,000 cap. At launch, only Bitcoin is supported.
Industry leader Upbit reinstated its lending program last week, modifying terms to meet the FSC’s requirements. Its maximum collateral cap fell by 25% — from $37,000 to $28,000.
Bithumb, the nation’s second-largest exchange, continues operating under its old structure but confirmed ongoing revisions.
“We fully understand the intent of the FSC and the DAXA guidelines,” a Bithumb spokesperson said, referring to the Digital Asset eXchange Association. “We are reviewing borrowing limits, ratios, and liquidation requirements to ensure investor protection and market stability. Our priority is to transition the service smoothly while minimizing user disruption.”
The FSC introduced its guidelines earlier this month in response to concerns over investor risk and excessive leverage. Regulators clarified that lending services must not operate as unchecked, high-risk products.
Exchanges must now provide loans only from their reserves and limit borrowing to large-cap cryptocurrencies. Borrowing limits are capped for each individual, and users must complete online education programs and pass suitability tests before accessing the service. To protect retail traders, authorities also set a maximum annualized interest rate of 20 percent and strengthened disclosure obligations.
Officials said the framework is designed to strike a balance — allowing innovation in virtual asset markets while ensuring consumer protection and curbing reckless speculation.
According to CoinGecko, six South Korean-based exchanges — including Upbit, Bithumb, and Coinone — collectively process $5.26 billion in daily trading volume.
