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- FSC caps crypto lending rates at 20% to protect investors.
- Lending limited to top 20 tokens listed on 3+ Korean exchanges.
- Borrowers must pass training, and exchanges can’t use customer deposits.
South Korea’s Financial Services Commission (FSC) has introduced new rules for crypto lending services on centralized exchanges (CEXs), signaling a stronger regulatory stance in one of Asia’s most active crypto markets. The measures, announced on September 5, cap interest rates at 20% and limit lending to top digital assets, aiming to protect retail investors while encouraging safer growth of the industry.
Key Rules for Exchanges and Borrowers
Under the new framework, crypto lending is restricted to tokens within the top 20 by market capitalization that are listed on at least three Korean won-based exchanges. Borrowers must undergo online training and suitability tests developed by the Digital Asset eXchange Alliance (DAXA) before accessing lending services.
Exchanges are also required to use their own funds for lending operations rather than customer deposits, a safeguard designed to prevent mismanagement similar to the failures seen in the FTX collapse. In addition, borrowers must be notified ahead of any potential forced liquidation and given the option to add collateral to protect their positions.
South Korea’s Expanding Crypto Oversight
The guidelines come amid South Korea’s rapid rise as a crypto hub in 2025, following President Lee Jae-myung’s push to embrace digital assets. Regulators have simultaneously tightened oversight, creating a permanent Joint Investigation Unit (JIU) for virtual asset crimes, which has already secured dozens of indictments and seized nearly $100 million in assets.
The FSC has also hinted at upcoming frameworks for stablecoins and broader legislation for digital assets, highlighting a long-term plan to balance innovation with investor protection.
Also Read: South Korea’s FSC Pick Rejects Crypto’s Value
Balancing Growth and Investor Protection
South Korea’s new lending rules reflect the country’s dual approach: encouraging innovation in financial technology while implementing strict oversight to prevent systemic risks. By limiting eligible tokens, capping lending rates, and requiring investor education, regulators aim to close gaps in crypto lending oversight and shield retail investors from excessive risk.
As South Korea strengthens its position in global crypto regulation, its new guidelines could set a precedent for other jurisdictions grappling with how to manage digital asset lending safely.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
I’m your translator between the financial Old World and the new frontier of crypto. After a career demystifying economics and markets, I enjoy elucidating crypto – from investment risks to earth-shaking potential. Let’s explore!
