Under the new framework, leveraged loans exceeding collateral value are prohibited. Interest rates are capped at 20%. Additionally, lending is allowed only for the top 20 cryptocurrencies by market capitalization or coins listed on at least three licensed local exchanges. 

New Rules for Crypto Lending Services 

The FSC stated in a press release that the guidelines reference global cases and define virtual asset lending clearly. The rules also include enhanced user protection measures. 

Products requiring users to repay loans in cash are restricted, as they violate existing credit regulations. Furthermore, companies offering lending services must use their own capital. Third-party services cannot be used to bypass these rules. 

The guidelines require lending limits based on user experience and transaction history. Moreover, investors must be informed in advance if their positions face liquidation risks. This ensures users avoid sudden losses. 

Implementation Overseen by DAXA 

The new rules apply only to selected cryptocurrencies. If a coin is flagged as a precautionary measure by exchanges, lending services for that asset must be halted. 

The FSC confirmed that the Digital Asset Exchange Alliance (DAXA) will monitor compliance. The commission plans to legislate the rules based on implementation results. 

The guidelines follow the August 19th suspension of credit services at local exchanges. Platforms like Upbit and Bithumb had launched various lending products. However, FSC’s directive required them to halt these services. 

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