South Korea has asked all crypto exchanges to stop starting new lending services because of the risks in the market and the safety of users. The country’s Financial Services Commission made this decision to protect investors from dangerous leverage levels that could lead to big losses.
SOUTH KOREA ORDERS EXCHANGES TO HALT CRYPTO LENDING
– South Korea’s Financial Services Commission (FSC) ordered domestic exchanges to suspend all crypto lending programs starting Tuesday.
– The regulator said the products operate in a legal gray zone and pose risks of user… pic.twitter.com/qyar606noE
— BSCN (@BSCNews) August 19, 2025
The move came after a troubling incident where over twenty-seven thousand customers used lending services on one major exchange in June. About thirteen percent of these users were forced to sell their holdings when crypto prices moved against them, causing significant financial damage.
Government officials are particularly concerned about the rising amount of borrowed money being used in crypto markets. A recent billion-dollar liquidation event showed how quickly things can go wrong when prices drop suddenly. This happened when Bitcoin fell from around $124,000 to $115,446 in just a few days.
While existing loans can continue until they naturally end, no new lending products can be launched until proper rules are created. The government will be introducing guidelines in the near future for making these services safer.
Some experts disagree with completely stopping lending services. They believe better safety measures and clearer information for users would be more effective than shutting down services completely.
Conclusion
South Korea’s suspension of new crypto lending products highlights growing regulatory concerns about market leverage and user protection. While existing loans continue, the move emphasizes the need for stronger safeguards in the rapidly evolving cryptocurrency lending sector.
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