On September 5, South Korea’s Financial Services Commission (FSC) released guidelines for lending services on centralised cryptocurrency exchanges.
The FSC stated that the document introduces investor protection measures based on global experience. The new rules prohibit leveraged lending that exceeds the value of the collateral. The interest rate is capped at 20% per annum.
Services cannot demand loan repayment in fiat currency. According to the regulator, this violates lending laws. Companies are required to use only their own capital for issuing loans and are prohibited from circumventing the rules through third-party services.
The guidelines set limits for each client, depending on their experience and transaction history. Platforms must notify users in advance about the risk of position liquidation.
Lending is permitted only for the top 20 cryptocurrencies by market capitalisation or assets traded on at least three local exchanges. If a platform assigns an asset a “warning” status, lending for it must be halted.
The South Korean Digital Asset Exchange Alliance will oversee compliance with the rules. The FSC plans to enshrine these standards in law at a later date.
In August, the regulator required local platforms to suspend crypto lending operations.
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