South Korea’s FSC has paused new crypto lending after massive user liquidations at Bithumb, reflecting global concerns over excessive leverage and highlighting a broader trend of regulatory tightening in digital asset markets.
South Korea's Financial Services Commission has temporarily suspended new crypto lending services following a major liquidation event at local exchange Bithumb, where over 27,000 customers used lending features in June and 13% were forced into liquidation. The pause will remain until official 'Virtual Asset Rental Service Guidelines' are issued, with regulators citing insufficient user protections and potential harm to market integrity. The move comes amid warnings to top exchanges over leveraged products and coincides with a global surge in crypto borrowing, which Galaxy Digital reports reached $44.25 billion in outstanding loans last quarter. Data shows average daily liquidations exceeding $350 million over the past month, with more than $3 billion wiped out in August so far, largely from altcoin shorts.