South Korea’s FSC has rolled out new rules for crypto lending, citing that the interest on this service is now capped at 20%.
By Godfrey Benjamin
Editor Hamza Tariq
Updated
3 mins read
On September 5, the South Korean regulator, the Financial Services Commission (FSC), released new guidelines for lending services on centralized cryptocurrency exchanges (CEXs).
This includes pegging interest rates at 20% and restricting the use of only the top digital assets
According to the FSC, crypto lending interest in South Korea is now capped at 20%. Lending is limited to tokens within the top 20 by market capitalization and listed on at least three won-based exchanges.
South Korea has made a name for itself as one of the top crypto hubs in Asia, especially for the first half of 2025. This comes from the sudden aggressive push for digital assets in the region under the administration of newly elected President Lee Jae-myung.
More crypto-based products, as leveraged lending services, were introduced in South Korea by local crypto exchanges.
As the demand for crypto spiked in this jurisdiction, so did the need for regulation.
In July, some sources reported that South Korea’s financial regulators were working on rolling out guidelines on cryptocurrency lending services.
Ultimately, the goal is to tighten oversight and protect investors, particularly because there is a gap in crypto lending regulation.
Based on the guidelines, exchanges are now mandated to make sure that first-time borrowers are knowledgeable about whatever products are being offered to them.
To achieve this, these borrowers must complete online training and suitability tests set by the local self-regulatory organization, the Digital Asset eXchange Alliance (DAXA).
Once there are signs of a potential forced liquidation, users must receive a notification in advance of this event.
Users will also be permitted to add capital to a position to avoid liquidation.
In addition, exchanges are expected to use their fund to provide lending services to borrowers and not under customers’ deposits, a situation that led to the implosion of Sam Bankman-Fried’s FTX.
Lee Eok-won, the nominee for Chairman of the FSC, believes that South Korea is quite critical of crypto.
His opinion is supported by the numerous actions that regulators in the region have taken towards upholding regulation.
At the beginning of 2025, FSC hinted at its plan to develop a regulatory framework for stablecoins.
It is also intended to expedite the next phase of virtual asset legislation. Kim Byoung-hwan, who was the Chairman of the FSC at the time, highlighted the country’s strong commitment to investor protection while staying in line with global trends.
Later, South Korean regulators backed their intentions with an upgrade of the country’s temporary crypto crime task force into a permanent investigation unit.
By this time, the Joint Investigation Unit (JIU) for Virtual Asset Crimes had recorded 41 indictments, 18 arrests, and the seizure of $97.5 million worth of crypto assets and luxury goods.
This was achieved in collaboration with other financial agencies such as the Financial Supervisory Service, the Financial Intelligence Unit (FIU), the Korea Exchange, the National Tax Service, the Korea Customs Service, and the Korea Deposit Insurance Corporation.
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Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.