South Korea Plans Regulation for Leveraged Crypto Lending by 2025

South Korean financial regulators, including the Financial Services Commission (FSC) and Financial Supervisory Service (FSS), are moving to introduce regulatory guidelines on leveraged cryptocurrency lending services to enhance investor protection and market stability. The new framework, expected by August 2025, will set leverage limits, eligibility criteria, risk disclosures, and transparency requirements, responding to concerns raised by recent lending products from major exchanges like Upbit and Bithumb, which allow borrowing up to four times collateral or 80% of asset value. Regulators have warned that excessive leverage and unclear safeguards in these services pose significant risks, prompting calls for voluntary self-regulation and adjustments from exchanges, including Upbit suspending its Tether lending product. The guidelines aim to establish a foundation for future crypto legislation, reflecting South Korea's broader push for accountability in the digital asset space while balancing innovation with consumer safety. However, some analysts caution that stricter domestic rules might push users toward offshore, less regulated platforms, increasing systemic risks. Overall, South Korea's proactive and collaborative approach, involving major exchanges and regulatory bodies, could set a global precedent for crypto lending oversight.