Despite tighter surveillance from South Korean financial authorities, leveraged “crypto lending” services have resurfaced throughout domestic exchanges.
Platforms such as Upbit, Bithumb and Coinone have revived or reconstructed controversial products under newly issued government guidelines, showing a cautious but notable comeback.
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Coinone starts borrowing coins
On Monday, Coinone, South Korea’s third largest cryptocurrency exchange, launched its new cryptocurrency trading service, “Coin Lending.” The deployment will take place just two months after competitors Upbit and Bithumb introduced similar services in July.
This product allows users to borrow cryptocurrency against Korean collateral, enabling leveraged trading strategies. In reality, this includes short selling. Cryptocurrency borrowing, selling at market prices, and if prices drop, we will buy back at a discount later.
Coinone emphasized that the service strictly follows government, IE and Financial Services Commission (FSC) lending guidelines. Under the rules, individual borrowing restrictions reflect between $22,000 (KRW 30 million) and $51,000 (KRW 70 million) depending on the user.
Customers can pledge only $37 through the service and borrow up to 82% of their collateral, subject to a $22,000 cap. At the time of release, only Bitcoin is supported.
Upbit and Bithumb coordinate services
Industry leader Upbit revived its lending program last week and changed its terms to meet FSC requirements. That maximum collateral cap fell 25% from $37,000 to $28,000.
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Bithumb, the country’s second largest exchange, continues to operate under the old structure, but confirms ongoing revisions.
“We fully understand the intent of the FSC and the DAXA guidelines,” a Bithumb spokesperson said, referring to the Digital Asset Exchange Association. “We are considering borrowing restrictions, ratios and liquidation requirements to ensure investor protection and market stability. Our priorities are to ensure smooth transitions of services while minimizing user disruption.”
Regulators push stronger safeguards
The FSC introduced guidelines earlier this month in response to concerns about investor risk and excessive leverage. Regulators have made it clear that lending services should not operate as unchecked high-risk products.
Exchanges now need to offer loans only from reserves and limit borrowing to large cryptocurrency. Borrowing restrictions are limited to a per-person limit, and users must complete an online education program and pass a conformance test before accessing the service. To protect retailers, authorities have set a maximum annual interest rate of 20% and strengthened disclosure obligations.
Officials said the framework was designed to balance. It allows for innovation in the virtual asset market while ensuring consumer protection and restraining reckless speculation.
According to Coingecko, six Korean exchanges (Upbit, Bithumb, Coinone, etc.) process $5.26 billion in daily trading volumes.
