The South Korean Financial Organizational Authority has decided to reduce high-risk loan practices in the CRIPTO sector, as local trading platforms have ordered all loan services linked to digital currencies until the end of the definition of an appropriate regulatory framework.
The most important points:
- The Committee of Financial Services (FSC) must order the suspension of the loan services linked to digital currencies, and the trading platforms of Cripto in South Korea are required to suspend these services in order to set official rules.
- These services exhibited 27,600 users who borrowed around $ 1.1 billion for risks and who forced 13% liquidation of force in the month.
- Organizational directives will soon be published in accordance with the promises of the organizers to develop a rules guide to protect users and maintain market stability.
The Committee of Financial Services (FSC) confirmed today, Tuesday, that it issued administrative directives to trading platforms in which they order them to stop their activities which allow users to borrow in exchange for their properties of digital currencies or cash deposits in official currencies, provided that this case comes into force and remains valid until the completion of new rules for the loan.
Rapid growth is accompanied by an increased risk
The popularity of loan services associated with digital currencies has increased since early July, because the Upbit platform has launched a loan program that allows users to borrow up to 80% of the value of their deposits in the Korean South Won (KRW) or their digital currencies that include USDT attachment, Bitcoin-BTC and a currency. Ripple-XRP as guaranteed for loan.
To follow its competitive Bithumb platform and offer a similar product which allows its users to borrow quantities of amount to 4 times the value of their property, and to dispatch other local platforms from following the same approach. On the other hand, these programs have coincided with the fact that the ruling party providing Digital Asset Basic Act, which aims to obtain loan services provides an official license which includes their declared activities.
On the other hand, the Committee of Financial Services (FSC) warned last month that these products operate in a gray organizational area and represent great risks; In its latest declaration, the organizational committee revealed that around 27,600 investors had borrowed 1.5 Billion from Wons (or approximately $ 1.1 billion) in the first month of launching the loan program for one of the platforms.
The committee added that around 13% of borrowers were subject to forced liquidation of their properties due to market fluctuations; The Committee also highlighted an unusual sale of the USDT sales due to loan services, which led to a temporary disruption of the value of stable currency on Korean platforms.
South Korea confused that the only “investment” The use is to get out of the functionality in the form of high interest rate.
Just like Japan. pic.twitter.com/reduup8dvc– Spencer Hakimian (@Spencerahakimian) August 4, 2025
The Committee of Financial Services has confirmed its desire to define a clear organizational framework for Loan Services related to CRIPTO by saying: “We will go quickly to prepare instructions aimed at protecting users and guaranteeing market stability”, adding that existing loans can be paid or extended under current contracts.
It should be noted that the trading platforms that do not respect the suspension will be subject to field inspections, which prompted Upbit and Bithumb platforms to suspend loan services in July, but the latter resumed loan activities but more strict conditions before the publication of the new comment.
South Korea reduces restrictions on digital currencies and opens the way to the launch of the first immediate negotiation boxes on the stock market This campaign comes in the light of the transformation of South Korea to the adoption of digital currencies in an organized manner, while the authorities continue to revive restrictions on institutional trade, and are preparing to accept the immediate immediately negotiation funds for digital assets on the stock market within the country.
The administration of President Lee Jae Myung also works on a regulatory framework associated with the value of Korean Won, which indicates a more open approach to digital funding despite recent restrictions.
For its part, the company Dunamu – Malika, revealed the main Upbit platform for digital asset trading platforms in South Korea – last week, the provision of new sacred services targeting customers of companies and institutions, in the midst of positive regulatory signals for investment of virtual active ingredients that have led to an increase in the demand for sure conservation solutions.
The service will provide all the digital assets deposited in cold storage portfolios which are not connected to the Internet and completely isolated from any electronic threat, in order to protect the sales of cyber attacks and other risks of external penetration.
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