Leverage and third-party lending are completely restricted, forcing restructuring even for small and medium-sized exchanges.
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The Financial Services Commission and the Financial Supervisory Service (FSS) released the "Virtual Asset Lending Service Guidelines" on the 5th, developed by a task force (TF) formed with the Digital Asset Exchange Joint Council (DAXA). They explained that this preemptive measure was taken out of concern that the recent intensifying competition among exchanges for lending products has increased the potential for investor harm. While the guidelines are self-regulatory in nature, they went into effect immediately after their release.
The authorities imposed comprehensive restrictions on high-risk products, including lending exceeding the collateral value, calculating repayment terms in Korean won, and lending in monetary terms. Exchanges were required to operate lending services solely with their own assets, and outsourcing or indirect operations through third parties were prohibited.
The loan limit per user is also capped at a minimum of 30 million won and a maximum of 70 million won, with varying amounts applied based on trading history and experience. The commission rate is capped at 20% per annum, the maximum legal rate, and lending is limited to the top 20 stocks by market capitalization or stocks listed on three or more Korean Won exchanges.
Bithumb is the one most impacted by this measure. Last July, Bithumb launched a lending service with up to four times leverage based on collateral, aiming to expand its market share. Despite financial authorities recommending a halt to new business last month, Bithumb continued operations by lowering the leverage to two times. However, the announcement of these guidelines effectively halts its expansion.
In particular, Bithumb's lending service, which has been operated through an external operator called "Blocktureal," directly falls under this regulation, which prohibits third-party operations. Industry insiders predict that a reduction in Bithumb's lending service is inevitable and will have a significant impact on the exchange competition structure in the medium to long term.
Lending services have been a key source of revenue for some exchanges. However, this regulation has forced a shift in their revenue structure, and the impact is expected to be particularly severe for small and medium-sized exchanges with weak capital. Some predict that a reduction in the means to increase trading volume will lead to a decline in liquidity, increasing the likelihood of their demise.
An industry insider said, "Lending services have been a key growth driver for exchange operations, but with the brakes now on, a shift in business models is inevitable." He added, "Small and medium-sized exchanges with limited financial resources are likely to undergo restructuring procedures within the year."
Experts believe this measure is merely the beginning of establishing a regulatory framework for virtual assets. Financial authorities are likely to expand the scope of regulation to include security token offerings (STOs), staking, and derivatives, thereby restructuring the virtual asset market. This is interpreted as part of the domestic virtual asset institutionalization process, aligned with global regulatory trends.
A financial industry official explained, "In the short term, a deterioration in the profitability of exchanges will inevitably occur, but in the long term, it could serve as an opportunity to establish a sound market order," adding, "It cannot be ruled out that the guidelines presented by the authorities could lead to future legislative processes."
