South Korea has temporarily suspended new cryptocurrency lending services following a major liquidation event at the #Bithumb exchange, where over 13% of the 27,000 users were liquidated. This move is a direct response to increasing leverage risks in the market.
Causes and Actions
The Financial Services Commission (#FSC ) of South Korea stated that the suspension is necessary because the current user protection tools are "insufficient" and there are "concerns about harm to a healthy trading order." This decision will last until official guidelines on lending services are issued.
Analysts believe that South Korea's action is not a permanent ban, but a signal that the government is seeking to tighten control over leverage and risks for retail investors. This is seen as a necessary step to create clearer rules and better protect users.
Global Context
The situation in South Korea is an example of the increasing leverage trend globally. A report from Galaxy Digital shows that the total value of loans secured by cryptocurrency has reached an all-time high of $44.25 billion, an increase of nearly 30% compared to the previous quarter.
Experts at Bitfinex also point out that the total value of liquidations remains high, averaging over $350 million per day over the past 30 days. This indicates that the market is entering a more vulnerable phase with high liquidation risks. South Korea's actions could set a precedent for other countries in controlling leverage and protecting the market. #Korea