South Korea is continuing its push to bring order to the volatile crypto market, this time targeting the lending sector.
In a definitive move last Friday, the nation’s Financial Services Commission (FSC) released a sweeping new guideline that draws clear boundaries for crypto lending.
Inspired by global cases, the rules are designed to eliminate the most speculative and risky practices.
The era of unlimited, high-interest leveraged loans is over, replaced by a strict 20% interest cap and a firm ban on under-collateralized lending.
The FSC is also shutting down loopholes, preventing companies from using third-party capital and ensuring that only the most reputable cryptocurrencies can be loaned. At its core, the reform prioritizes user safety, forcing platforms to act responsibly by judging a user’s risk capacity and providing crucial warnings before their assets are liquidated.
