Haciyev Reşit 
South Korea’s Financial Services Commission (FSC) has instructed local crypto exchanges to temporarily suspend lending services until proper guidelines are established. This move aims to prevent investor losses and maintain market stability.
Currently, crypto lending services operate in a legal gray area, and price volatility poses risks for users.
Current Situation in the Crypto Lending Market
On July 4, 2025, Upbit allowed users to borrow up to 80% of their assets in Tether (USDT), Bitcoin (BTC), and XRP. Bithumb, on the other hand, enabled users to take loans worth up to four times their holdings. Within just the first month, approximately 27,600 investors borrowed a total of 1.5 trillion won ($1.1 billion). Due to volatility, 13% were forced to liquidate their positions.
The FSC will develop new guidelines for crypto lending services. Until these rules come into effect, repayments and maturity extensions will remain possible for existing loan contracts. Exchanges failing to comply with the guidelines will be subject to on-site inspections. The main goal is to protect users and enhance market security.
Crypto Policy and Next Steps
South Korea is taking a more open stance on crypto, mirroring crypto-friendly moves in the U.S. The government is gradually lifting its ban on institutional crypto trading, preparing to approve its first spot crypto ETFs, and planning to establish a stablecoin market pegged to the local currency. Under President Lee Jae Myung’s administration, there is a clear commitment to integrating crypto into the financial system.
Importance for the Market and Investors
The temporary suspension may create short-term uncertainty in the markets but is expected to pave the way for lasting regulations that will protect investors and strengthen market stability in the long run. Investors are closely monitoring the content of the new guidelines and the conditions under which crypto lending services will resume.
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