South Korea Halts Crypto Lending Pending New Regulations

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South Korea’s Financial Services Commission (FSC) has instructed cryptocurrency exchanges to suspend lending services until official guidelines are established.

The FSC issued administrative guidance today, effective immediately, requiring exchanges to halt crypto lending operations. This follows the recent introduction of lending services by major platforms like Upbit and Bithumb, which allowed users to borrow against deposits or digital assets.

The move comes as regulators assess risks associated with crypto lending, which they consider a legal gray area. Upbit and Bithumb had previously paused their services last month, though Bithumb later resumed with stricter terms.

The FSC’s decision aligns with ongoing discussions around the proposed Digital Asset Basic Act, which aims to formally permit such services under regulated conditions.