The Financial Services Commission (FSC) of South Korea has established new rules regarding cryptocurrency lending aimed at enhancing transparency and protecting investors.
Interest Rate Caps
The FSC has announced that the interest rate on crypto loans is now capped at 20%. Additionally, leveraged lending is prohibited.
Lending Procedures
Crypto lending is restricted to the top 20 tokens by market capitalization or those listed on at least three won-based exchanges. Additionally, first-time borrowers must complete online training and suitability tests set by the Digital Asset eXchange Alliance (DAXA). In the event of forced liquidations, users must be notified in advance.
Popularity of Crypto Among Youth
Recent reports indicate a growing interest in cryptocurrencies among South Korea's youth. However, despite more than 16 million crypto exchange users, representing over 30% of the country's population, some experts suggest that financial desperation is a key driver behind this trend.
With the new FSC regulations, South Korea aims to improve transparency and investor protection in the crypto exchange sector, particularly among its youth, who see cryptocurrency as an opportunity amidst economic uncertainty.
