South Korean Regulators Crack Down on Crypto Lending Amid Legal Uncertainty
South Korea’s Financial Services Commission (FSC) has mandated a temporary suspension of cryptocurrency lending services across domestic exchanges, citing regulatory concerns.
In notices sent to exchanges today, the FSC directed them to halt lending operations starting Tuesday, pending the development of formal guidelines. The decision follows the recent rollout of lending products by major platforms, including Upbit and Bithumb, which allowed users to leverage their crypto or fiat holdings for loans.
The FSC had previously warned exchanges on July 31, stating that these services operated in a legal gray zone and posed significant risks to users. Upbit and Bithumb briefly paused their offerings last month, with Bithumb later reintroducing lending under tighter restrictions.
The regulatory intervention comes as South Korea’s ruling party pushes for the Digital Asset Basic Act, which would explicitly permit crypto lending under a regulated framework.
