South Korea to Regulate Leveraged Crypto Lending by August 2025

South Korea is preparing to introduce regulatory guidelines for leveraged cryptocurrency lending services as part of its broader strategy to strengthen oversight and protect retail investors. The Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have formed a joint task force, which includes representatives from major exchanges and the Digital Asset eXchange Alliance (DAXA), to develop a framework that will address risks associated with high-leverage lending products [1]. The guidelines, expected to be finalized in August 2025, will cover leverage limits, eligibility criteria for users, risk disclosures, and transparency requirements for lending activities [2][3].

The initiative follows the launch of new lending services by domestic exchanges Upbit and Bithumb, which have allowed users to borrow up to four times their collateral or 80% of their asset value [4]. Regulators have raised concerns about the lack of clear safeguards for investors in a market prone to rapid fluctuations, prompting the need for a more structured approach [5]. The task force is also reviewing high-risk services, such as those offering excessive leverage or fiat-based lending, to ensure they align with the principles of investor protection [3].

The new regulatory framework is expected to include measures such as mandatory risk assessments and investor education programs, ensuring that only informed participants can access leveraged lending products [4]. This approach reflects the government’s broader push to increase accountability in the digital asset space and lays the groundwork for future crypto legislation [5].

Industry reactions have been mixed. Some analysts warn that stricter rules may drive users to offshore platforms, where oversight is less stringent and risks are higher [6]. Others argue that South Korea’s proactive stance could set a global benchmark, particularly given the country’s active retail crypto market [7]. Political debates have also revealed some internal disagreements over the speed and scope of the regulation, but the government remains committed to its direction [8].

Major exchanges like Upbit and Bithumb are likely to be directly impacted, as they may be required to adjust their services to comply with the new standards. This could limit the availability of high-leverage products for retail investors and reshape the competitive landscape of the domestic crypto market [6].

As the guidelines take shape, South Korea continues to position itself as a key player in the global crypto regulatory landscape. The new rules aim to balance innovation with investor protection, reinforcing the government’s commitment to a stable and transparent digital asset ecosystem [2].

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[1] South Korea to Issue Crypto Lending Guidelines in August (https://cointelegraph.com/news/south-korea-crypto-lending-guidelines-august)

[2] South Korea to target leveraged crypto lending services ... (https://www.tradingview.com/news/cointelegraph:302180747094b:0-south-korea-to-target-leveraged-crypto-lending-services-with-new-rules/)

[3] South Korea Forms Task Force to Develop Virtual Asset ... (https://www.binance.com/en/square/post/07-31-2025-south-korea-forms-task-force-to-develop-virtual-asset-lending-guidelines-27679444403257)

[4] South Korea's financial regulator plans to issue guidelines ... (https://www.panewslab.com/en/articles/f0ayyvrs)

[5] South Korea Cracks Down on Leverage in Crypto Trading ... (https://www.ainvest.com/news/south-korea-cracks-leverage-crypto-trading-investor-protection-push-2507/)

[6] BTCUSD - South Korea to target leveraged crypto lending ... (https://mx.advfn.com/bolsa-de-valores/COIN/BTCUSD/crypto-news/96533374/south-korea-to-target-leveraged-crypto-lending-ser)

[7] South Korea Flags Upbit and Bithumb's Crypto Lending ... (https://decrypt.co/332881/south-korea-flags-upbit-and-bithumbs-crypto-lending-margin-trading-services/)

[8] South Korea's Ruling, Opposition Parties Clash Over ... (https://cryptoadventure.com/south-koreas-ruling-opposition-parties-clash-over-stablecoin-regulation/)