New South Korea Rules Slash Crypto Lending Rates to 20%

The Financial Services Commission (FSC) announced new measures that put sharp limits on how exchanges can offer loan products, framing the move as a push to protect retail traders after months of scrutiny on local platforms.

The centerpiece of the policy is a hard ceiling: interest on crypto loans cannot exceed 20%. Leverage is also being clipped — exchanges are forbidden from issuing loans worth more than the collateral posted by users.

In addition, products that force repayment in cash have been outlawed, as regulators argued they resemble unlicensed credit services.

To prevent backdoor lending, companies will have to rely solely on their own capital, and borrowing limits will be set according to each user’s trading history. Platforms must also give advance warnings before liquidations, a first in the country’s crypto oversight framework.

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Not every digital asset qualifies. The new rules only apply to the 20 largest tokens by market value or to coins listed on three or more licensed Korean exchanges. If a token is flagged as high risk, lending tied to it must stop immediately.

The Digital Asset Exchanges Association (DAXA) has been tasked with enforcement, and the FSC has hinted that the rules could eventually be written into law. The crackdown follows last month’s suspension of lending products at Upbit and Bithumb, a warning shot that foreshadowed today’s tighter regime.

The information provided in this article is for informational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.

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