South Korean Regulators Address Crypto Lending Concerns

South Korea’s financial regulators, FSC and FSS, summoned Upbit and Bithumb executives on July 25, 2025, expressing concerns over newly launched cryptocurrency lending services with significant leverage.

The services’ suspension highlights regulatory tension around investor protection, as both exchanges face scrutiny, prompting the industry to collaborate on self-regulatory measures to ensure stability.

South Korea Probes High Leverage in Crypto Lending

Upbit and Bithumb recently introduced services permitting crypto-backed lending, allowing investors to engage in leveraged trading. Bithumb offers up to 4x leverage with ten cryptocurrencies, while Upbit restricts its offering to three coins with an 80% LTV limit. Following regulatory concerns about insufficient user protections, both exchanges adjusted their offerings. Bithumb exhausted its lending limits and paused new applications, while Upbit suspended its USDT lending service.

The absence of adequate safeguards and legal clarity prompted the financial authorities to engage with the exchanges, leading to a collaborative effort aimed at establishing self-regulatory guidelines. This move highlights the critical need for the industry’s adaptability to legislative expectations.

“As of July 30, 2025, no direct quotes from executives of Upbit or Bithumb, nor from officials at the FSC or FSS, are available. However, the actions taken and developments in the regulatory landscape indicate caution and increased scrutiny within the South Korean crypto market.”

South Korea’s Traditional vs. Crypto Leverage Disparity

Did you know? South Korea’s traditional stock market only permits a 2x leverage cap for equity ETFs, illustrating the disparity in regulatory approaches between conventional and crypto financial products.

Bitcoin (BTC), leading the digital currency market, is priced at $116,290.09 with a market cap of $2.31 trillion. Bitcoin’s market dominance is 60.96%, despite a 1.03% decline in 24 hours, per CoinMarketCap. Over the past 90 days, Bitcoin has appreciated 20.52%, reflecting significant market volatility.

Insights from the Coincu research team suggest that regulators’ emphasis on formulating self-regulatory frameworks could spur increased transparency and compliance in the crypto sector. Past experiences highlight the need for stringent oversight to prevent market disruptions and bolster investor confidence.