The South Korean exchange Bithumb has implemented stricter rules for its cryptocurrency lending service, which was launched a month ago, reducing leverage by half and significantly lowering loan limits to address investor risk concerns.
Bithumb announced on Monday that it has resumed its cryptocurrency lending function after suspending services on July 29 due to 'insufficient lending volume', according to South Korea's (Kukmin Ilbo).
Bithumb stated: 'After a comprehensive review of the entire service, some adjustments were made to protect investors and improve service quality.' The leverage ratio has been reduced from 4x to 2x, and the maximum loan amount has dropped from 1 billion KRW (726,000 USD) to 200 million KRW (145,000 USD), a reduction of 80%.
The new lending limit also applies to investors with cumulative trading volumes exceeding 100 billion KRW (72 million USD) over the past three years.
South Korea establishes a cryptocurrency lending working group
On July 31, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) formed a working group with the Korea Financial Institute and local exchanges to draft 'guidelines for virtual asset lending services'.
The working group will include members from the FSC, FSS, and the Digital Asset Exchange Alliance (DAXA), focusing on designing rules aimed at addressing leverage limits, asset eligibility, and risk transparency.
Regulators have also required exchanges to reassess high-risk or legally ambiguous services, especially those involving excessive leverage or fiat-based loans.
Before resuming operations, Bithumb reviewed its service terms with regulators.
A quarter of South Koreans aged 20 to 50 own cryptocurrencies
According to a report by Hana Financial Institute, over a quarter of South Koreans aged 20 to 50 own cryptocurrencies, with cryptocurrencies accounting for an average of 14% of their financial portfolios. The highest ownership rate is among those in their 40s, at 31%.
Reports indicate that retail investors in South Korea are shifting from large tech stocks in the U.S. to cryptocurrency-related stocks, with the share of their top 50 net purchased stocks rising from 8.5% in January to 36.5% in June, and then to 31.5% in July.