Bithumb Resumes Crypto Lending with 80% Cut and 2x Leverage
Bithumb, South Korea’s leading crypto exchange, has resumed its crypto lending service after pausing on July 29 due to low volumes and consulted regulators before relaunch. The exchange cut its crypto lending cap by 80%, lowering the maximum loan to 200 million won, and halved maximum leverage from 4x to 2x. These stricter terms apply even to traders with over 100 billion won in cumulative trades over three years. The changes follow guidance from the Financial Services Commission (FSC) and Financial Supervisory Service (FSS) as they draft Virtual Asset Lending Service Guidelines under the Digital Asset eXchange Alliance, focusing on leverage limits, asset eligibility and risk disclosure. The move comes amid wider risk management efforts after KYC lapses at Upbit. South Korea’s retail crypto market remains robust, with over 25% of 20–50-year-olds holding digital assets and allocating an average of 14% of their portfolios to crypto, shifting focus from US tech stocks to crypto-related equities.
Bearish
Bithumb’s decision to slash its crypto lending limits by 80% and halve leverage to 2x will directly reduce traders’ borrowing capacity, likely dampening short-term trading volumes and exerting downward price pressure on crypto assets. In the longer term, enhanced investor protection, clearer regulatory guidelines and improved risk disclosure may strengthen market stability by mitigating systemic risks and restoring confidence. Overall, the tightened crypto lending terms are expected to produce a bearish impact initially, though improved market resilience could moderate volatility over time.