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South Korea’s Financial Services Commission Introduces Virtual Asset Lending Guidelines

South Korea’s Financial Services Commission Introduces Virtual Asset Lending Guidelines

The new guidelines cap crypto lending interest, ban leverage services, and introduce stringent market stability measures to protect investors amid rising crypto lending risks.

VIRTUAL

Fact Check
Multiple recent news sources (Sources 1, 4, 11) explicitly state that South Korea's Financial Services Commission (FSC) has announced and will implement 'Virtual Asset Lending Guidelines.' The information is corroborated across these sources, which describe the new rules. Older articles provided as evidence confirm that these guidelines were in development by the FSC, providing consistent context.
    Reference: 123
Summary

South Korea’s Financial Services Commission has imposed new regulations on virtual asset lending, capping interest rates at 20% annually and banning leveraged loans exceeding collateral value. Exchanges must use their own assets for lending, and eligibility is limited to top-ranked cryptocurrencies. The guidelines aim to mitigate risks after significant growth in crypto lending and investor harm from forced liquidations. The rules also include mandatory training for borrowers and reporting of liquidation data by exchanges.

Terms & Concepts
  • Virtual Asset Lending: The practice of lending cryptocurrency or digital assets to users, typically through exchanges, with the expectation of repayment plus interest.
  • Leverage: The use of borrowed funds to increase the potential return of an investment, which is prohibited under the new guidelines for virtual asset lending in South Korea.
  • KRW Exchanges: Cryptocurrency exchanges that operate in South Korea and offer trading pairs with the Korean Won (KRW), the country’s national currency.