South Korea’s top financial regulator has ordered crypto exchanges to halt the launch of new digital asset lending services, citing rising risks and the need for clearer rules.
The Financial Services Commission (FSC) said on Tuesday that it has sent official letters to exchanges, instructing them to suspend new lending offerings until regulatory guidelines are finalized. However, existing contracts, including repayments and maturity extensions, will still be allowed.
The move comes after the FSC and the Financial Supervisory Service (FSS) set up a joint task force on July 31 to establish a framework for overseeing crypto lending. The forthcoming rules are expected to set limits on leverage, define who can use such services, and require stronger risk disclosures.
The FSC added that it will carry out on-site inspections and take regulatory action against any platforms that fail to comply with the suspension order.
South Korea Reports $1.1 Billion in Transactions from Single Exchange
According to FSC, one unnamed crypto exchange attracted around 27,600 users within a month of launching its lending service in mid-June. The platform processed about 1.5 trillion Korean won ($1.1 billion) in transactions during that period. However, roughly 13% of its users, about 3,635 people, faced forced liquidations after the value of their crypto holdings dropped.
The FSC also noted that two other companies offering Tether (USDT) lending services triggered heavy sell-offs, which led to an unusual drop in USDT prices. Regulators warned that allowing new lending products to continue without proper safeguards could put investor funds at further risk.
A new report from the Hana Institute of Finance shows that more than a quarter of South Koreans aged between 20 and 50 now hold cryptocurrency. The study, titled “2050 Generation’s Virtual Asset Investment Trends,” found that 27% of people in this age group own digital assets, and 70% of them plan to increase their investments. On average, crypto accounts for 14% of the respondents’ financial portfolios, with participation highest among those in their 40s (31%), followed by people in their 30s (28%) and 50s (25%).
The report also highlighted how many investors see crypto as part of their long-term financial planning. Among respondents in their 50s, 78% said they use crypto for savings, while 53% are including it in their retirement strategies. The main reasons cited were growth potential, diversification benefits, and the appeal of structured savings through digital assets.
