South Korea Targets Leverage Limits; Crypto Exchanges Respond

South Korea’s Financial Services Commission and Financial Supervisory Service expressed concerns over leveraged lending products by Upbit and Bithumb, leading to service changes last week.

Stricter regulations could drive risk-prone users to offshore platforms, affecting investor protection and local market integrity.

Regulatory Pressure Forces Changes at Major Crypto Exchanges

In response to concerns from the Financial Services Commission and the Financial Supervisory Service, South Korea’s premier financial watchdogs, Upbit suspended its USDT lending, while Bithumb maintained a debated 4x leverage ratio. Regulators identified increased systemic risks with these offerings.

In response, Bithumb revised its product without altering the leverage capacity, while Upbit fully suspended high-leverage services. Industry analysts warn that such regulatory scrutiny could drive users to platforms in jurisdictions with weaker compliance.

Kim Joo-hyun, Chairman, Financial Services Commission (FSC), “We plan to establish a task force with the industry to draft voluntary self-regulation measures for crypto lending and margin trading.” – Korea JoongAng Daily

South Korea’s Consistent Regulatory Approach Targets Crypto Leverage

Did you know? South Korea’s efforts to limit leverage in crypto markets echo past restrictions on traditional financial products, such as the 2x cap on ETFs. This demonstrates a consistent regulatory approach aiming to manage systemic risks.

CoinMarketCap data indicates that Tether USDt (USDT) trades with a market cap of formatNumber(163736061553, 2), holding a 4.20% dominance in the cryptocurrency market. Its recent days saw a -2.02% price change, suggesting fluctuations amid regulatory adjustments.

The Coincu research team anticipates that continued regulatory focus could result in reforms influencing not only leverage products but also spur better industry self-regulation practices. Stakeholders are keenly watching for future regulatory guidelines.