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South Korea Enacts Comprehensive Crypto Lending Restrictions to Safeguard Markets and Investors South Koreaʼs Financial Services Commission FSC, in collaboration with the Financial Supervisory Service and the Digital Asset Exchange Alliance DAXA, released stringent “Virtual Asset Lending Guidelinesˮ on September 5th, 2025, to enforce broad-ranging reforms aimed at curbing speculative excess and fortifying investor protection. These rules uniformly cap annual interest rates at 20 percent, ban leveraged lending exceeding the borrowerʼs collateral, and prohibit repayment in fiat currency—mandating that exchanges use their own capital to fund loans and disallow third-party intermediaries to prevent regulatory avoidance. Lending eligibility is limited strictly to cryptocurrencies ranked in the top 20 by market capitalisation or those listed on a minimum of three local Won-based exchanges; any asset flagged with a warning status is barred from lending programs.

The framework enshrines dynamic, investor-centric precautions: first-time borrowers must complete DAXA-administered online training and suitability assessments; personalized lending limits—ranging between 30 million to 70 million Won—are calibrated to users' trading histories; platforms must deliver timely warnings ahead of forced liquidations and allow clients to add collateral; and they must publish data on fees, loan volumes, and liquidation events in real time or monthly. These guidelines, which came after a regulatory-mandated suspension of crypto-lending services in August prompted by risky offerings on major platforms like Upbit and Bithumb, represent South Koreaʼs pivot toward a proactive, self-regulating architecture—one designed not only to stabilise the domestic digital asset market but also to lay the groundwork for potential future codification into law.