South Korean exchange Bithumb has tightened the rules of its cryptocurrency lending service, which has only been in operation for a month, halving the leverage and significantly reducing the loan limits to address investor risk concerns.
According to the Korea National Daily, the exchange announced on Monday that it has resumed its cryptocurrency lending service after suspending it on July 29 due to "insufficient lending volume."
Bithumb stated, "After a comprehensive review of the entire service, some adjustments have been made to protect investors and improve service quality." The exchange has reduced the maximum leverage ratio from 4x to 2x and cut the maximum loan amount from 1 billion KRW (approximately $726,000) to 200 million KRW (approximately $145,000), an 80% reduction.
Reportedly, the new lending limits even apply to investors whose cumulative trading volume over the past three years exceeds 100 billion KRW (approximately $72 million).
On July 31, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) established a working group with the Korea Financial Research Institute and local exchanges to draft "Guidelines for Virtual Asset Lending Services."
The working group will include members from the FSC, FSS, and the Digital Asset Exchange Alliance (DAXA), representing the country's five major exchanges. It will draw on international standards, stock market regulations, and the specific needs of the South Korean cryptocurrency market to formulate rules addressing leverage limits, asset eligibility, and risk transparency.
Authorities have also requested exchanges to reassess high-risk or legally ambiguous services, particularly those involving excessive leverage or fiat loans.
Reportedly, Bithumb reviewed its service terms with regulators before resuming operations under the new restrictions.
Cointelegraph has contacted Bithumb for comments but has not received a response as of the time of publication.
According to a report by Hana Financial Research Institute, more than a quarter of South Koreans aged 20 to 50 hold cryptocurrencies. On average, cryptocurrencies account for 14% of their financial portfolios. The highest holding rate is among those in their 40s at 31%, followed by those in their 30s and 50s.
Reportedly, South Korean retail investors are shifting from large U.S. tech stocks to cryptocurrency-related stocks, with their share of net purchases among the top 50 stocks rising from 8.5% in January to 36.5% in June, before falling back to 31.5% in July.
Related: Ethereum ETF absorbs 6 million ETH! Bitcoin pioneer: ETH funds will eventually return to BTC
Original article: “Reports say Bithumb halves cryptocurrency lending leverage and slashes loan limits by 80%”
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