South Korea’s financial authorities are set to introduce official guidelines for cryptocurrency lending services next month, aiming to strengthen oversight and safeguard investors amid rising concerns over leveraged crypto products.
On Thursday, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) announced the creation of a joint task force to establish a regulatory framework for crypto lending, according to local media outlet Yonhap News Agency (YNA). The initiative comes in response to new lending offerings recently launched by domestic exchanges Upbit and Bithumb.
Per YNA, Bithumb has allowed users to borrow up to four times the value of their collateral, while Upbit has offered loans equal to 80% of users’ asset value.
The formation of the task force appears to be a reaction to the current lack of investor protection mechanisms, with regulators concerned about the risks of sudden market volatility and potential investor losses.
South Korea Strengthens Regulations on Crypto Lending
The task force will reportedly include members from the Financial Services Commission (FSC), the Financial Supervisory Service (FSS), and the Digital Asset eXchange Alliance (DAXA)—a self-regulatory body comprising South Korea’s five major crypto exchanges: Upbit, Bithumb, Coinone, Korbit, and Gopax.
In developing the new crypto lending guidelines, the task force will take into account international standards, existing stock market regulations, and the unique characteristics of South Korea’s digital asset market.
The forthcoming guidelines are expected to address key areas such as leverage limits, eligibility criteria for users and assets, mandatory risk disclosures, and transparency requirements for digital asset lending activities.
Authorities have also urged exchanges to reassess services considered high-risk or legally ambiguous—particularly those involving excessive leverage or fiat-based lending.
These upcoming regulations are anticipated to lay the groundwork for broader crypto legislation, aligning with the government’s wider efforts to enhance accountability and investor protection in the digital asset sector.
Bank of Korea to Establish Virtual Asset Committee
The creation of the crypto lending task force comes on the heels of a recent move by South Korea’s central bank to expand its focus on digital assets. The Bank of Korea has restructured its existing central bank digital currency (CBDC) research and development teams into a broader Virtual Asset Team with an expanded mandate.
This new team will be responsible for addressing developments related to stablecoins and other crypto assets and will play a key role in supporting the government throughout the legislative process.
The formation of the Virtual Asset Team was announced amid a surge in South Korean bank stocks, following initiatives tied to stablecoins. In June, data from Google Finance showed that shares of banks such as Kakao Bank, Kookmin Bank, and the Industrial Bank of Korea jumped between 10% and 19% after filing stablecoin-related trademarks.
