South Korea’s FSC Issues New Crypto Lending Guidelines, Capping Interest at 20%

On September 5, South Korea's Financial Services Commission (FSC) issued new lending guidelines for centralized cryptocurrency exchanges (CEXs).

Key Points of the New Crypto Lending Guidelines

Interest rates for crypto lending are capped at 20%.
Lending is restricted to tokens within the top 20 by market capitalization and listed on at least three won-based exchanges.
First-time borrowers must complete online training and suitability tests set by the Digital Asset eXchange Alliance (DAXA).
Users must be notified in advance of potential forced liquidation and can add capital to avoid it.
Exchanges must utilize their own funds for lending services, not customer deposits.

These regulations aim to enhance oversight and protect investors amid growing demand for crypto products in South Korea. The FSC plans to develop a broader regulatory framework for stablecoins and has established a permanent investigation unit for crypto crimes. Recent actions by this unit include 41 indictments, 18 arrests, and the seizure of $97.5 million in assets.