South Korean financial authorities express concern over leveraged lending services on crypto exchanges

PANews reported on July 30th that, according to Yonhap News Agency, South Korea's Financial Services Commission and the Financial Supervisory Service convened executives from five virtual asset exchanges on July 25th to express concerns about the cryptocurrency lending services recently launched by Upbit and Bithumb. They cited legal issues, insufficient user protections, and the potential impact of leveraged investments on the operators' financial stability. Previously, Bithumb launched a service on the 4th, offering up to 4x leverage on 10 cryptocurrencies, collateralized by assets or Korean won. Upbit also launched a service on the same day, offering up to 80% of the loan amount for three cryptocurrencies. These services allow investors to employ short-selling strategies, particularly Bithumb's 4x leverage, raising concerns about insufficient user protections. Currently, leveraged ETFs in South Korea only offer a maximum of 2x. Following the meeting, Upbit suspended its USDT lending service on the 28th, and Bithumb adjusted its lending services on the 29th, temporarily suspending new applications due to limited quotas. In light of the ongoing controversy, financial authorities have decided to form a special working group with the industry to develop self-regulatory rules.

South Korean financial authorities express concern over leveraged lending services on crypto exchanges

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