Key Takeaways:
- Set for August 2025, South Korean regulators and major exchanges are drafting new crypto lending guidelines to address high-risk leverage and investor protection concerns.
- Bithumb and Upbit’s lending services offering up to 4× leverage prompted regulatory scrutiny, exceeding traditional financial leverage limits.
- The new framework will set rules on leverage caps, borrower eligibility, risk disclosures, and asset types, laying groundwork for future crypto legislation.
South Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have jointly established a task force alongside the Digital Asset Exchange Association (DAXA) and five leading crypto exchanges, which includes Upbit and Bithumb, to formulate Guidelines for Virtual Asset Lending Services, to be scheduled in August 2025 according to CoinTelegraph.
This initiative is a direct response to newly launched lending products offered by domestic exchanges in early July. It is recalled that last July 4, Bithumb launched a crypto lending service on offering maximum of 4× leverage across ten crypto tokens, including Bitcoin (BTC) and Ethereum (ETH). Upbit also introduced a similar product which allows the users to borrow up to 80% of their collateral, but subsequently paused its Tether (USDT) lending service conflicted by regulatory concerns under Korea’s Lending Business Act.
Meanwhile, CoinPedia Fintech News highlighted that officials flagged that crypto lending services in Korea have been operating without enough regulatory clarity especially regarding leverage ratios, borrower qualifications, risk disclosures, and eligible digital assets. Addressing these concerns help in improving the lending practices, where a direct engagement between regulators and exchange reps has been made.
What the Guidelines Will Cover
The task force will draw on standards from both traditional finance and international crypto regulations to shape the forthcoming framework. The expected guidelines will include core areas like max leverage limits, user eligibility criteria, asset eligibility, internal control requirements, and transparency in loan terms and risk disclosures.
Although these guidelines will initially be non-binding, they are likely to be incorporated into South Korea's broader crypto legislation under the proposed Digital Asset Basic Act (DABA).
Market Impact and Real-Time Data
As of writing (1:40 PM UTC), the broader crypto market shows no sign of significant movements, exhibiting relatively stable price fluctuations over the past 24 hours despite regulatory developments.
According to CoinGecko’s latest crypto market data, Bitcoin (BTC) currently trades at approximately $118,500 with a 24-hour gain of 0.7%. Ethereum (ETH), on the other hand, stands at roughly $3,807, marking a 1% gain over the past 24 hours. Meanwhile, Solana (SOL) is priced at $177, down 0.2%, showing some softness amid sector rotation.
So far, the market has not reacted with sharp volatility, suggesting that participants are awaiting the final wording of the guidelines before making major shifts in strategy. Nonetheless, investor sentiment could be affected if the new rules curb access to popular lending features.
What’s next?
South Korea’s upcoming crypto lending framework signals a shift toward proactive and preventative regulation. By addressing leverage and transparency issues now, regulators aim to protect retail investors before lending abuses lead to broader financial instability. The final version of the guidelines is expected in August 2025, and its rollout may also influence the next phase of Korea’s crypto legislation.
Summary
South Korea’s financial authorities are preparing new crypto lending guidelines aimed at curbing excessive leverage and increasing investor protections. Set for release in August 2025, the framework is a response to recent high-leverage products from Bithumb and Upbit, which offered up to 4× leverage. The task force, which includes top exchanges and regulators, will define rules around borrowing limits, user eligibility, asset types, and disclosure standards. While the crypto market has shown little immediate reaction, the move signals a regulatory shift that may soon feed into broader crypto legislation under the proposed Digital Asset Basic Act.
