Korean financial regulators issued a sharp warning against cryptocurrency lending and margin trading services recently offered by major platforms like Bithumb and Upbit. This escalation could lead to a critical shift in the digital market structure in South Korea by tightening rules and restricting investor behavior regarding lending and trading. High-level meeting with platforms.

According to a report by the "Korea JoongAng Daily," both the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) met with leaders of five major digital trading platforms to discuss the risks associated with high-leverage products, emphasizing the fragility of current investor protections. Concerning leverage and emergency decisions.

On July 4, Bithumb launched a lending service with leverage of up to 4 times, which is double the maximum allowed in the Korean stock market. The service allows users to use cryptocurrencies or won as collateral and includes support for ten major digital currencies, including $BTC and $ETH .

In contrast, Upbit launched a similar service but later suspended it for fear of violating Korean laws that might consider stablecoin lending as a form of consumer lending. New regulations and concerns about capital flight.

Korean authorities are now seeking to establish voluntary standards to regulate cryptocurrency lending and margin trading, awaiting the implementation of new laws. However, there is growing concern that these rules may drive investors away, weakening the state's control over the local market. In contrast... Korea enhances digital innovation.

Despite the restrictions, South Korea is moving forward with the development of digital currency infrastructure. The Bank of Korea has renamed its research lab to the "Digital Currency Lab," and the FSC plans to launch exchange-traded funds for digital currencies by 2025, with guarantees to protect investors.

In another move, eight Korean banks are seeking to launch stablecoins backed by the Korean won between 2025 and 2026, enhancing the state's sovereignty in the digital currency sector.

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