Business Sandesh Indian Newspaper | Articles | Opinion Pieces | Research Studies | Findings & News | Sandesh News
South Korea’s leading cryptocurrency exchange, Bithumb, has drastically scaled back its crypto lending services following intense regulatory pressure from the Financial Services Commission (FSC) and Financial Supervisory Service (FSS). On August 11, 2025, Bithumb reduced its leverage ratio from 4x to 2x and slashed its maximum lending cap by 80%, from 1 billion won ($718,298) to 200 million won ($143,600), per Kookmin Ilbo. This follows a temporary suspension of lending services on July 29, 2025, due to “insufficient lending volume,” with operations resuming on August 8 after adjustments to enhance investor protection.
The FSC and FSS, concerned about systemic risks and inadequate investor safeguards, met with South Korea’s five major exchanges on July 25, 2025, flagging high-leverage lending as exceeding the 2:1 stock market cap. Bithumb’s lending, launched in July 2025 for 10 cryptocurrencies including Bitcoin, faced criticism for enabling excessive leverage without a clear legal framework. Rival exchange Upbit also halted its Tether (USDT) lending service on July 28, reflecting similar regulatory concerns.
A joint task force, including the FSC, FSS, and Digital Asset eXchange Alliance (DAXA), is set to release comprehensive crypto lending guidelines by late August 2025, aligning with stock market protocols to ensure transparency and limit risks. This regulatory push follows South Korea’s 2024 Virtual Asset User Protection Act, emphasizing segregated wallets and anti-money laundering measures.
Bithumb’s restructuring aims to balance compliance with innovation, maintaining services for retail and institutional investors while addressing regulatory demands. As South Korea tightens crypto oversight, these changes signal a shift toward a more stable, regulated digital asset market, potentially influencing global standards. Stay informed as Bithumb navigates this evolving landscape.
