Bithumb Reduces Crypto Lending Loan Limits by 80% Amid Regulatory Changes
South Korea's Bithumb exchange has revised its crypto lending service, reducing loan limits by 80% and cutting the leverage ratio by 50% to mitigate investor risks. This adjustment follows the suspension of operations on July 29 due to insufficient lending volume.
The new borrowing cap will impact high-volume traders with over 100 billion won (approximately $72 million) in trading activity over three years.
Regulatory Developments
On July 31, South Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) initiated a task force to create "Virtual Asset Lending Service Guidelines" in collaboration with local exchanges and the Korea Institute of Finance. The guidelines aim to establish rules on:
- Leverage limits
- Asset eligibility
- Risk disclosure requirements
Regulators are intensifying oversight of crypto firms, addressing issues such as KYC violations, and have advised exchanges to evaluate high-risk offerings.
Bithumb consulted with authorities regarding its service terms before resuming operations.
Market Insights
South Korea's crypto market remains robust, with over 25% of individuals aged 20 to 50 owning cryptocurrency, constituting about 14% of their financial portfolios. Ownership is highest among those in their 40s at 31%. The Hana Institute of Finance reported a shift from U.S. Big Tech stocks toward crypto-related shares among retail investors.