Bithumb Exchange Slashes Crypto Lending Leverage to 2x Amid Regulatory Crackdown

Seoul-based cryptocurrency exchange Bithumb has drastically reduced leverage on its lending service just one month after launch, responding to regulatory pressure and weak demand. The platform initially offered 4x leverage on ten major cryptocurrencies including Bitcoin and Ethereum but now caps borrowing at 2x leverage with an 80% cut in maximum loan amounts.

Financial regulators had identified excessive leverage as a systemic risk, leading to Bithumb's sudden policy change. The exchange temporarily halted the service in late June before reintroducing it with tighter restrictions. Even high-volume traders now face a 200 million won ($72 million) borrowing limit, regardless of their transaction history.

This development comes as South Korean regulators work with exchanges to establish clearer rules for crypto lending products. New guidelines are expected to standardize leverage limits, eligible collateral assets, and risk disclosure requirements across the industry.