South Korea to unveil crypto lending rules in August as oversight intensifies

South Korea’s top financial regulators are preparing to roll out formal guidelines on cryptocurrency lending services in August. This marks a significant step towards greater investor protection and risk management in the country’s fast-evolving digital asset landscape.

The move comes as leading exchanges, including Upbit and Bithumb, introduce lending products that allow users to borrow large sums against crypto assets—sometimes up to four times their collateral or 80% of their asset value—raising concerns about exposure to rapid market shifts.

New joint task force formed to regulate crypto loans

On Thursday, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) announced the formation of a joint task force to design South Korea’s first regulatory framework specifically targeting crypto lending.

According to a report by Yonhap News Agency, this task force also includes members from the Digital Asset eXchange Alliance (DAXA)—a self-regulatory body representing major exchanges such as Upbit, Bithumb, Coinone, Korbit, and Gopax.

The joint task force will consider global standards, South Korea’s own securities laws, and the unique characteristics of the digital asset ecosystem.

The resulting guidelines will aim to clarify operational boundaries, introduce leverage caps, and enforce stricter risk disclosures and transparency protocols.

Bithumb and Upbit under scrutiny for leveraged lending

The urgency behind the task force’s creation follows a spike in leveraged lending by major platforms.

Bithumb has reportedly offered loans up to four times the value of the user’s collateral, while Upbit has extended credit equivalent to 80% of users’ holdings.

These offerings, currently operating without dedicated oversight, have triggered concern among policymakers and investors alike, particularly amid volatile market conditions.

As the FSC and FSS draft the upcoming regulations, exchanges have been asked to re-evaluate products that involve high levels of risk or lack clear legal backing.

This includes fiat-based loans and services enabling excessive leverage, which authorities say must be reviewed to ensure investor safety and legal clarity.

Bank of Korea expands mandate with virtual asset committee

Parallel to the lending task force, the Bank of Korea has also restructured its central bank digital currency (CBDC) teams into a broader Virtual Asset Team.

This new committee will oversee issues related to crypto assets, including stablecoins, and work closely with the government during the legislative process.

The restructuring follows growing interest in stablecoin-related innovation within the traditional banking sector.

In June, Google Finance data showed a 10% to 19% surge in shares of Korean banks like Kakao Bank, Kookmin Bank, and the Industrial Bank of Korea after they registered trademarks related to stablecoins.

The combined regulatory push—from lending rules to stablecoin oversight—signals South Korea’s intention to establish a comprehensive governance model for digital finance, especially as domestic exchanges scale up offerings that mirror traditional financial instruments.

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