South Korean regulators have stepped in after Bithumb
$2.25B
introduced new loan and trading features that raised legal and investor safety concerns.
According to a July 30 report by Korea JoongAng Daily, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) called a meeting with the country’s five largest exchanges on July 25 to discuss the issue.
On July 4, Bithumb introduced a feature that offers users the option to borrow up to four times the value of their crypto assets. The service supported 10 digital assets, including Bitcoin
Did you know?
Subscribe – We publish new crypto explainer videos every week!
How to Avoid Rug Pulls in Crypto? (5 Ways Explained)
Upbit launched a similar feature, though it only applied to XRP
However, this kind of setup has raised red flags for financial authorities, as it resembles risky practices usually restricted in traditional finance.
After the meeting with regulators, Upbit decided to suspend its Tether lending option. The exchange said it would review the service to ensure it complies with Korean law, which treats some lending products as regulated financial activities.
Bithumb later adjusted its system but kept its four-times borrowing limit.
Officials are especially concerned that these products allow for short-selling and high-risk trades without clear protections for users.
They also noted that without clear legal guidelines, lending backed by digital assets could fall under existing rules for loan services, which would require licenses and stricter oversight.
Meanwhile, the Bank of Korea (BOK) recently introduced a new Virtual Asset Team. What is the group’s role? Read the full story.
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.
