Bithumb slashes crypto loan limits by 80% as South Korea tightens lending regulations

Bithumb, one of the largest cryptocurrency exchanges in Asia, has significantly revised its lending policies in response to regulatory scrutiny. The platform has cut maximum loan limits by 80% and reduced leverage from 4x to 2x, capping the maximum loan amount at 200 million won ($145,000) from a previous limit of 1 billion won ($726,000) [1]. These changes aim to address concerns around high-risk lending practices and align with regulatory expectations in South Korea.

The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have been intensifying their focus on virtual asset lending, with efforts underway to establish a regulatory framework for such services. These guidelines are expected to cover leverage limits, asset eligibility, and risk disclosure requirements [1]. Bithumb’s revised rules suggest a proactive approach to compliance, signaling a broader shift in the industry toward tighter risk management and greater investor protection.

The adjustments will likely affect both retail and institutional traders who use leveraged positions to amplify returns. With lower limits on borrowing and leverage, the potential for high-risk trades diminishes, which could reduce the frequency of cascading liquidations during market downturns. However, the move may also impact the platform’s lending-related revenue streams, as fewer users will be able to access large leveraged positions [1].

South Korea has shown strong adoption of cryptocurrency, with over 25% of South Koreans aged 20–50 currently owning digital assets, according to a report by the Hana Institute of Finance [1]. The highest ownership rate is among individuals in their 40s, at 31%. These figures highlight the growing significance of crypto in the national financial landscape and underscore the importance of regulatory oversight in managing systemic risks.

Bithumb’s decision reflects an industry-wide trend as exchanges worldwide recalibrate their lending offerings in response to regulatory pressures. The company has previously faced regulatory challenges related to anti-money laundering compliance, and its current adjustments may help it align with evolving standards. This proactive approach could enhance its standing with both regulators and users, who increasingly demand transparency and security in crypto services.

The broader implications of these changes remain to be seen, but they signal a shift toward a more stable and regulated lending environment. As the market continues to evolve, Bithumb’s ability to balance innovation with compliance will be critical in maintaining its competitive edge. The revised rules may serve as a benchmark for other exchanges seeking to operate within a more structured regulatory framework.

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[1] Cointelegraph: [Bithumb halves crypto lending leverage, slashes loan limits by 80%: Report](https://cointelegraph.com/)