South Korea Sets New Caps on Crypto Lending Leverage
South Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have launched a joint task force with the Digital Asset eXchange Alliance (DAXA) to draft comprehensive crypto lending regulations. The framework will impose caps on leverage ratios, define eligible assets, mandate clear risk disclosures, and enforce transparency in lending reports.
Top exchanges including Bithumb and Upbit—offering loans up to four times collateral and 80% loan-to-value, respectively—will need to comply. These measures aim to curb excessive crypto lending, strengthen investor protection, and prevent market instability in the wake of global platform failures such as Celsius and BlockFi. The draft rules, expected next month, mark Seoul’s expanded push for digital asset oversight and are set to reshape future legislation.
Neutral
The introduction of stricter crypto lending regulations in South Korea may initially dampen high-risk margin trading by limiting leverage ratios on major exchanges. Reduced leverage could curb speculative demand for BTC and other assets, putting slight downward pressure on prices in the short term. However, by enhancing transparency, defining eligible assets, and enforcing risk disclosures, these measures strengthen investor protection and market stability. This improved regulatory clarity is likely to build long-term confidence in digital asset markets, encouraging sustainable growth. Therefore, the overall market impact is expected to be neutral, balancing short-term restriction effects with long-term confidence gains.