Bithumb has resumed its crypto lending service after a temporary suspension, slashing loan limits by 80% and cutting leverage from 4x to 2x, with new borrowing caps.
By Bhushan Akolkar
Editor Hamza Tariq
Updated
2 mins read
South Korea’s popular crypto exchange Bithumb has tightened rules on its newly launched crypto lending service, while cutting loan limits by a massive 80%.
The crypto exchange dropped the leverage ratio by 50%, in order to address investor risk concerns.
After suspending operations last month on July 29, due to “insufficient lending volume,” Bithumb has kickstarted its crypto lending services once again, reported local news publication Kookmin Ilbo.
According to the report, the lowered borrowing cap will apply even to high-volume traders with more than 100 billion won ($72 million) in cumulative trading activity over the past three years.
Last month on July 31, South Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) established a task force working with local exchanges and the Korea Institute of Finance, in order to develop “Virtual Asset Lending Service Guidelines.”
The group will have representatives from the FSC, FSS, and the Digital Asset eXchange Alliance (DAXA), representing five largest crypto exchanges in South Korea.
It plans to create rules based on international standards, stock market regulations, and the specific needs of South Korea’s crypto market.
The guidelines will cover areas such as leverage limits, asset eligibility, and risk disclosure requirements.
South Korean regulators have been cracking down on lapses by crypto firms, with crypto exchange Upbit facing scrutiny last month over KYC violations.
Regulators also urged exchanges to review high-risk or legally ambiguous offerings, particularly those involving excessive leverage or fiat-based loans.
Bithumb reportedly consulted with authorities on its service terms before resuming operations.
South Korea’s crypto market has been thriving while dominating the global market in trading activity during the first half of this year.
More than 25% of South Koreans aged 20 to 50 own cryptocurrency, with digital assets making up an average of 14% of their financial portfolios.
Ownership is highest among people in their 40s at 31%, followed by those in their 30s and 50s.
The Hana Institute of Finance also noted that South Korean retail investors are shifting away from U.S. Big Tech stocks toward crypto-related shares. In response, regulators have warned against including COIN and MSTR stocks in their ETF portfolios.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
