South Korea Unveils Crypto Lending Framework With FSC and Major Exchanges

South Korea’s financial authorities have joined forces with major cryptocurrency exchanges to draft comprehensive guidelines for Bitcoin lending services, aiming to establish a safer and more transparent environment for digital asset leveraged trading [1]. The initiative, led by the Financial Services Commission (FSC) and Financial Supervisory Service, includes DAXA and five leading crypto exchanges, forming a dedicated task force [1]. The guidelines are expected to be finalized by next month and will focus on key areas such as leverage limits, eligible assets for lending, internal control standards, and enhanced user education [1].

This regulatory push reflects a broader effort to re-examine high-risk financial services within the crypto market. Authorities have emphasized the need to protect investors from the volatility and potential pitfalls of leveraged lending products, particularly given the lack of clear rules in this emerging sector [1]. The task force is also reviewing international regulatory frameworks and local stock market practices to ensure the guidelines align with both global standards and Korea’s unique market conditions [1].

The development marks a significant step in the country’s evolving stance toward crypto regulation. In July, the FSC proposed the introduction of spot crypto ETFs by the second half of 2025, signaling openness to institutional participation [2]. At the same time, the Bank of Korea has formed a dedicated Virtual Asset Team to enhance coordination with market players [3]. These moves indicate a more structured and proactive approach to managing the risks and opportunities associated with digital assets.

Regulatory scrutiny has already intensified in recent months, with warnings issued to major exchanges such as Upbit and Bithumb regarding their lending and leveraged trading operations [4]. The new lending framework is intended to provide clearer operational boundaries, reducing the likelihood of financial instability and increasing investor confidence [4]. By setting enforceable standards, the guidelines aim to balance innovation with risk management, ensuring a more resilient crypto ecosystem.

As South Korea moves forward with its regulatory agenda, it is setting a potential precedent for other jurisdictions grappling with the challenges of digital asset markets. The success of this initiative will depend on the clarity and enforceability of the guidelines, as well as the willingness of exchanges to implement them effectively [5]. This coordinated effort between regulators and market participants highlights the growing importance of structured oversight in fostering a sustainable crypto environment.

Source:

[1] South Korea Forms Task Force to Develop Virtual Asset ... (https://www.binance.com/en/square/post/27679444403257)

[2] Tourists Can Now Withdraw Cash With USDT via Kaia ... (https://decrypt.co/332878/tourists-can-now-withdraw-cash-with-usdt-via-kaia-atms-in-south-korea)

[3] Bank of Korea Forms New Digital Currency Teams Amid ... (https://thecoinrise.com/bank-of-korea-forms-new-digital-currency-teams-amid-stablecoin-push/)

[4] Korean Crypto Regulation: Urgent Warning Issued To ... (https://bitcoinworld.co.in/korean-crypto-regulation-warning/)

[5] South Korea Crypto Lending: A Landmark Move For ... (https://bitcoinworld.co.in/south-korea-crypto-lending-rules/)