South Korea Introduces New Guidelines for Crypto Lending

South Korea's Financial Services Commission (FSC) has published a new set of guidelines for crypto lending services on centralized exchanges. The rules are designed to enhance user protection by setting clear standards for the industry.

The new regulations include several key provisions:

• Leverage is restricted: The guidelines prohibit lending services that allow a user to borrow more than the value of their collateral.
• Interest rate cap: A cap of 20% has been set on interest rates.
• Repayment methods: Products that require repayment with cash instead of crypto are now prohibited.
• Capital requirements: Companies must use their own capital for these services and cannot use third-party services to bypass the rules.
• Liquidation warnings: Users must be given advance notification if they are at risk of liquidation.
• Lending limits: The amount a user can borrow will be capped based on their experience and transaction history.

The guidelines also restrict the types of cryptocurrencies available for lending. Services are now limited to the top 20 cryptocurrencies by market cap or those traded on at least three licensed local exchanges. Lending must also be suspended for any crypto that is flagged as "cautionary" by an exchange.

These new rules, which are effective immediately, will be overseen by the Digital Asset Exchange Alliance (DAXA) and are a direct response to the recent launch of new lending services by local exchanges. The FSC plans to use the results of this implementation to inform future legislation.

September 2025, Cryptoniteuae