South Korea Clamps Down on Crypto Lending: Regulators Halt New High-Risk Products Amid Leverage Fears

South Korean regulators just dropped the hammer on crypto firms pushing leveraged lending products—and the timing couldn’t be more ironic.

Regulators Hit the Brakes

No more 'innovative' yield schemes or borderline Ponzi mechanics disguised as DeFi. The Financial Services Commission (FSA) isn’t buying the hype this time.

Leverage = Systemic Risk?

With crypto markets already volatile, unchecked lending products could turn minor corrections into full-blown liquidity crises. Remember Celsius? Yeah, so do they.

Crypto’s Compliance Reckoning

This isn’t just a warning—it’s a precedent. Other regulators are watching. Meanwhile, crypto bros will keep pretending 20% APY is 'sustainable' until the next blowup.

Park said that transparency gaps also complicate oversight: Bithumb discloses the scale of its lending activity, but Upbit, the country’s largest exchange, does not. That opacity could make it harder for regulators to judge systemic risks and may be a key factor behind the blanket suspension.

“Until these structural issues are addressed, reopening may take time; priority should be understanding the mechanism and adopting a data-driven design, rather than blanket restrictions,” he concluded.