Following regulatory pressure, Bithumb significantly reduced its cryptocurrency lending limits. The exchange lowered maximum leverage to 2x and cut loan caps by 80%, reflecting a growing concern about high-risk crypto lending products within the Korean market. This overhaul is part of a broader effort to ensure investor protection and enhance service quality as South Korea’s Financial Services Commission launched a specialized task force on July 31 to establish comprehensive guidelines for virtual asset lending.
The task force, composed of the Financial Supervisory Service, the Korea Institute of Finance, and key exchange representatives, will develop international best practices and address local market demands. They aim to clarify regulations on leverage restrictions, acceptable assets, and mandatory risk disclosures from exchanges. Bithumb’s response is a significant step towards increased compliance with regulatory guidelines as crypto adoption continues its upward trend in South Korea, particularly among younger generations who are increasingly turning to cryptocurrency investments.
Bithumb has restarted its lending services after halting operations on July 29. The exchange made changes to ensure investor security and improve service quality, reducing loan caps to 200 million won from the previous 1 billion won, a drastic 80% cut. This policy shift is significant as it comes in light of government officials emphasizing the need for control over high-risk services with excessive leverage or fiat-based loans.
The move highlights growing concerns about crypto lending practices and the importance of responsible risk management within the cryptocurrency market, especially in a country where younger demographics are embracing digital assets significantly.