09-10-2025 
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Amid a surge in digital asset trading in South Korea, the country’s top finance sector regulator has implemented new guidelines capping digital asset lending interest at 20% annually and banning leveraged and third-party lending.
- South Korea’s digital asset lending cap
- Speculation concerns
- Ban on leverage services
- User protection
- Market stability is a key motivator for the changes
The new rules, announced by the Financial Services Commission (FSC) on September 5, will take effect immediately and are to be “self-regulated” by the Digital Asset Exchange Association (DAXA)—an industry organization made up of the five major digital asset exchanges in South Korea, Upbit, Bithumb, Coinone, Korbit, and Gopax.
These top five exchanges account for over 95% of the country’s digital asset market, and DAXA works together to set rules and protect users in the digital asset market. The new guidelines follow a three-pronged approach, focusing on the scope of service, user protection, and market stability.
“The guidelines clearly define the scope of virtual asset lending services by referring to global cases, and establish various user protection measures such as user suitability verification and explanation obligations, while also establishing obligations for business operators to ensure market stability,” said the FSC.
The changes come amid concerns raised by regulators related to leverage risks and potential gaps in investor protections, inspired by the booming digital asset space in South Korea.
Concerns
A report by the Bank of Korea (BOK) in April revealed that digital asset trading volume in South Korea surpassed its stock market volume in 2024. The report showed that the combined value of digital assets held by the DAXA five stood at KRW104 trillion ($73.3 billion) as of the end of last year.
This apparent boom time for speculative digital currency trading has sparked concerns among the country’s regulators, who fear the sector’s volatility.
“There are doubts about what kind of positive impact virtual assets have on the real economy. Between the two markets, the money should be going to stocks,” said FSC head Kim Byoung-Hwan.
It also raised fears around riskier practices such as leveraged lending, whereby money—or digital assets—is lent to companies or investors with a lot of debt or weaker credit, making the loan riskier but often with higher interest rates.
In its announcement of the new guidelines, the FSC noted that most institutional digital asset exchanges, such as Coinbase (NASDAQ: COIN), operate leverage services primarily for institutional users, limiting leverage for individuals.
However, Upbit and Bithumb—South Korea’s first and second largest digital asset exchanges, respectively—recently began offering individuals leverage services.
According to a July report from local outlet Korea JoongAng Daily, Bithumb began offering a service on July 4 that allows users to borrow digital currencies using their digital assets or won, with loans of up to four times their collateral. On the same day, Upbit introduced a similar lending service for Tether, BTC, and Ripple, which is also backed by digital assets or fiat deposits.
On July 30, the FSC and Financial Supervisory Service (FSS)—the former responsible for formulating financial policies, the latter for implementing them—reportedly summoned executives from the country’s five major digital asset exchanges, including Upbit and Bithumb, to discuss the new offerings and express concerns over leverage-related risks and potential gaps in investor protections.The outcome of this meeting appears to be the new guidelines and last Friday’s FSC announcement that they are coming into effect.
Scope of service
One of the most significant new rules is a ban on leverage services that exceed the collateral value, and therefore “pose a high risk of user damage when lending virtual assets.”
Additionally, the FSC stated that, when operating a digital asset lending service, the principle is to “utilize the operator’s own assets.” Thus, indirect lending services through third parties were also banned, “to prevent regulatory evasion.”
User protections
To address concerns around digital asset lending, the FSC announced several changes.
Firstly, businesses providing digital asset lending services must verify whether users using the service for the first time have completed an online training and qualification test administered by DAXA, and “must set lending limits for each user based on their experience using the lending service, trading history, etc.”
Secondly, the lending service fee “must not exceed the maximum interest rate of 20% per annum set by other credit-related laws and regulations.”
Finally, lending services must disclose key information, including the fee system, lending status by digital asset type, and forced liquidation status.
Market stability
With market stability being a key motivator of the changes, the FSC specified that the digital assets available for lending are limited to those ranked within the top 20, in terms of market capitalization, or those supported for trading on three or more Korean Won exchanges.
Exchanges that provide lending services are required to disclose the types of digital assets available for loan, their balances, and collateral status on their websites. On top of this, lending services are obliged to establish internal controls to manage market volatility and prevent excessive price fluctuations, due to the “concentration of lending demand” for a specific digital asset.
The new guidelines are to be self-regulated by DAXA and its members, meaning they will not be enforced by regulators. However, the FSC rounded off its announcement by promising to “quickly pursue legislation on related regulations based on the contents of the guidelines and the progress of their operation.”
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