Bithumb Slashes Crypto Lending Terms Amid Regulatory Pressure
- Bithumb cut maximum leverage and reduced loan caps by 80% after regulatory pressure.
- South Korea’s Financial Services Commission formed a specialized task force on July 31 to create comprehensive crypto lending guidelines.
The Bithumb exchange in South Korea has slashed its cryptocurrency lending service limits drastically after it faced a lot of regulatory scrutiny. The platform reduced maximum leverage by half to 2x and reduced loan caps by 80%. The radical reforms are an indication of the increased governmental concerns regarding high-risk crypto lending products in the Korean market.
Regulatory Crackdown Forces Major Service Overhaul
Bithumb restarted its crypto lending service on Monday after halting the service on July 29 because of the lack of lending volume problems. The exchange made extensive adjustments to safeguard investors and enhance the quality of service in general, as stated by the company. The maximum lending limits were reduced to 200 million won as compared to 1 billion won, an incredible 80% cut in the amount of available credit.
Even traders with more than 100 billion won in a three-year trading history have to deal with these tightened new borrowing limits. The policy turnaround is dramatic since on July 31, the Financial Services Commission in South Korea established a specialised task force. This regulatory body consists of the Financial Supervisory Service, the Korea Institute of Finance, and the key exchange representatives collaborating.
The task force will develop complete guidelines for the Virtual Asset Lending Service based on international practices and the demands of the domestic market. These rules will cover some crucial aspects, such as leverage restrictions, acceptable assets, and compulsory risk disclosure requirements by exchanges.
Government officials specifically asked exchanges to review high-risk services entailing too much leverage or troublesome fiat-based loan products across the country. Bithumb is said to have liaised with regulators prior to making such drastic changes in its operations and returning to lending services under close supervision.
The regulatory response comes as cryptocurrency adoption surges across South Korea’s younger demographic groups remarkably. A recent study by the Hana Institute shows that more than a quarter of South Koreans between 20 and 50 years of age are actively investing in cryptocurrencies. The average market penetration rates are high since digital assets make up about 14% of their total financial portfolios.
The highest ownership is recorded in the forties at 31% with those in the thirties and fifties age groups coming close. Korean retail investors are turning to crypto-linked stocks in preference to more conventional US technology investments, with crypto-related equity buying rising to 36.5% in June, up from 8.5% in January, before tapering off slightly.
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Bithumb Slashes Crypto Lending Terms Amid Regulatory Pressure
- Bithumb cut maximum leverage and reduced loan caps by 80% after regulatory pressure.
- South Korea’s Financial Services Commission formed a specialized task force on July 31 to create comprehensive crypto lending guidelines.
The Bithumb exchange in South Korea has slashed its cryptocurrency lending service limits drastically after it faced a lot of regulatory scrutiny. The platform reduced maximum leverage by half to 2x and reduced loan caps by 80%. The radical reforms are an indication of the increased governmental concerns regarding high-risk crypto lending products in the Korean market.
Regulatory Crackdown Forces Major Service Overhaul
Bithumb restarted its crypto lending service on Monday after halting the service on July 29 because of the lack of lending volume problems. The exchange made extensive adjustments to safeguard investors and enhance the quality of service in general, as stated by the company. The maximum lending limits were reduced to 200 million won as compared to 1 billion won, an incredible 80% cut in the amount of available credit.
Even traders with more than 100 billion won in a three-year trading history have to deal with these tightened new borrowing limits. The policy turnaround is dramatic since on July 31, the Financial Services Commission in South Korea established a specialised task force. This regulatory body consists of the Financial Supervisory Service, the Korea Institute of Finance, and the key exchange representatives collaborating.
The task force will develop complete guidelines for the Virtual Asset Lending Service based on international practices and the demands of the domestic market. These rules will cover some crucial aspects, such as leverage restrictions, acceptable assets, and compulsory risk disclosure requirements by exchanges.
Government officials specifically asked exchanges to review high-risk services entailing too much leverage or troublesome fiat-based loan products across the country. Bithumb is said to have liaised with regulators prior to making such drastic changes in its operations and returning to lending services under close supervision.
The regulatory response comes as cryptocurrency adoption surges across South Korea’s younger demographic groups remarkably. A recent study by the Hana Institute shows that more than a quarter of South Koreans between 20 and 50 years of age are actively investing in cryptocurrencies. The average market penetration rates are high since digital assets make up about 14% of their total financial portfolios.
The highest ownership is recorded in the forties at 31% with those in the thirties and fifties age groups coming close. Korean retail investors are turning to crypto-linked stocks in preference to more conventional US technology investments, with crypto-related equity buying rising to 36.5% in June, up from 8.5% in January, before tapering off slightly.
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