The Financial Services Commission (FSC) of Korea announced new rules for cryptocurrency loans on centralized exchanges:
Maximum annual interest rate: 20%.
Total prohibition of leveraged loans exceeding the value of the collateral.
Loans can only be offered on the top 20 tokens by market capitalization or those listed on at least three exchanges in won.
User protection measures are required:
Loans only with the exchange's own capital; the use of third parties (outsourcing) is prohibited.
New users must complete online training and pass a suitability assessment provided by the self-regulatory organization DAXA.
The risks of liquidation must be notified in advance, and users should be allowed to add funds to avoid it.
These measures came into effect immediately and are based on a temporary suspension prior to mid-August, due to high-risk products offered by exchanges such as Upbit and Bithumb.
Why are these regulations important?
Key point Main implication
Investor protection: Prevents excessive debt, forced liquidations, and usurious practices.
Market stability: Reduces systemic risks arising from uncontrolled leveraged products.
Strict local regulation: Korea establishes clear standards and seeks to legislate definitively.
Transparency and training: Users receive more information and preparation before operating with loans.
What impact could it have?
In exchanges and users: More conservative and less risky loan services.
Local market: Less speculation and more institutional confidence in the crypto ecosystem.
Risk of disintermediation: Some users may seek unregulated offshore platforms; still, the measure raises the credibility of the South Korean market.