South Korea Imposes 20% Cap on Crypto Lending and Bans High-Risk Loans

South Korea’s Financial Services Commission (FSC) has introduced strict new rules for cryptocurrency lending. The guidelines, announced Friday, aim to protect investors by:

• Capping annual interest rates on crypto loans at 20%.
• Banning leveraged loans that exceed the value of a user’s collateral.
• Restricting lending to only the top 20 cryptocurrencies by market cap or those listed on three or more licensed local exchanges.
• Requiring platforms to use their own capital for lending, preventing them from using customer assets for high-risk activities.

Additional user protections include limits on loan amounts based on a user’s experience and mandatory advance warnings before a position is liquidated.