Bithumb Buckles Under Pressure: Major Pullback in Crypto Lending Services Looms
South Korea's crypto giant Bithumb is tightening its belt—regulators just handed them the receipt.
The Squeeze Is On
After months of regulatory arm-wrestling, Bithumb’s crypto lending operations face drastic cuts. No more "easy money" for yield chasers—at least not through their platform.
Compliance Over Convenience
Insiders whisper the Financial Services Commission (FSA) played hardball. Now Bithumb joins the growing list of exchanges choosing survival over defiance. Guess even crypto cowboys need permits.
What’s Left in the Wreckage?
Spot trading survives unscathed—for now. But the lending desk? Gutted like a DeFi protocol after a flash crash. Traders scrambling to relocate funds might trigger a mini liquidity crunch.
Another win for regulators, another headache for crypto maximalists. The irony? Traditional banks still offer riskier loans daily—just with nicer suits and bigger bailouts.
Bithumb Crypto Lending Rethink
Bithumb was also forced to temporarily suspend crypto lending on July 29, claiming this was due to “insufficient lending volume.”
It resumed the service on August 8. But Kookmin Ilbo quoted a Bithumb spokesperson as saying:
“After a comprehensive review of the entire service, we have made some adjustments to protect investors and improve the quality of our services.”
The exchange added that the new terms WOULD also apply to “qualified investors” (those with a cumulative trading volume of over 100 billion won over the past three years).
Bithumb did not mention regulatory pressure. But the media outlet agreed that the “move appears to reflect criticism from financial authorities, who claim it is offering excessive leverage in the absence of a clear legal framework.”
Regulators Set to Release Guidelines
The Bithumb move follows a hastily arranged meeting late last month of all five fiat-trading crypto exchanges at the behest of the Financial Services Commission (FSC) and Financial Supervisory Service (FSS).
The regulators voiced concerns about leverage-associated risks. They also expressed concerns about a lack of comprehensive investor protection protocols.
They complained that some services “offer excessive leverage to users.” The FSC and the FSS agreed that some platform users lack understanding about crypto lending.
Bithumb reportedly responded by rethinking its operating limits during the service’s downtime.
Rival platforms also appear to be scaling back their own offerings. Upbit has announced it will exclude Tether (USDT) from its new crypto lending services.
Kookmin Ilbo added that unnamed industry sources predict that the FSC and FSS will release a set of comprehensive guidelines for crypto lending “as early as the end of the month.”
The sources suggested that the regulatory framework would likely reflect many of the protocols used to police Leveraged investments in the South Korean stock market.
Bithumb initially said it would be providing lending services on 10 cryptoassets including Bitcoin (BTC).
