On September 5, 2025, South Korea's Financial Services Commission (FSC) announced strict guidelines for crypto lending aimed at reducing risky practices and ensuring market stability.
Risk Limitation Strategy
The new regulations are designed to minimize market volatility and attract institutional investors by clarifying risk management frameworks and limiting leverage.
Interest and Loan Caps
The commission initiated prohibitions on excessive leverage and set interest caps for loans, which are expected to stabilize the market. Guidelines also include asset eligibility based on the top 20 cryptocurrencies.
Historical Context and Market Impact
Similar previous financial regulations have shown positive effects on market stability. It is expected that these new rules will reduce risky lending practices and promote a shift toward decentralized finance.
The introduction of new regulations aims to enhance market transparency and protect investors, while aligning South Korea with global financial regulatory standards.
