South Korea Enforces Strict Controls on Crypto Lending Services

South Korea's Financial Services Commission (FSC) has rolled out stringent guidelines to regulate credit services offered by centralized cryptocurrency exchanges. Effective September 5, the rules impose a 20% cap on interest rates for crypto loans and ban leveraged loans exceeding collateral value. The move aims to mitigate risky financial practices in the digital asset market.

Under the new framework, crypto lending products demanding cash repayments or indirect third-party structures are prohibited. Credit limits will be tied to users' transaction history and experience, with mandatory pre-liquidation notifications. Regulatory oversight falls to the Digital Assets Exchange Alliance (DAXA), a consortium of local exchanges. The FSC plans to codify these measures into law following an evaluation period.