Bithumb, a South Korean crypto exchange, has tightened rules for its month-old crypto lending service, cutting leverage in half and sharply lowering loan limits to address investor risk concerns.
The exchange resumed the service on Monday after halting it on July 29 due to “insufficient lending volume,” local outlet Kookmin Ilbo reported.
Following a full review, Bithumb said it made changes “to protect investors and improve service quality.”
The maximum leverage has been reduced from 4x to 2x, while the loan limit has been slashed by 80%, from 1 billion won ($726,000) to 200 million won ($145,000).
The tighter borrowing cap will apply even to traders with over 100 billion won ($72 million) in cumulative trading volume over the past three years, according to the report.
Bithumb Works With Regulators on New Lending Rules
On July 31, South Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) launched a task force with the Korea Institute of Finance and local exchanges to develop “Virtual Asset Lending Service Guidelines.”
The group made up of representatives from the FSC, FSS, and the Digital Asset exchange Alliance (DAXA), which represents the country’s five largest exchanges, will base the guidelines on international standards, stock market rules, and the unique needs of South Korea’s crypto market.
The rules are expected to cover areas such as leverage caps, eligible assets, and risk disclosure requirements.
Regulators also urged exchanges to review high-risk or legally unclear offerings, especially those involving high leverage or fiat-based lending.
Bithumb reportedly consulted with regulators on its service terms before relaunching under the revised limits. More than a quarter of South Koreans aged 20 to 50 own cryptocurrency.
On average, digital assets make up 14% of their financial portfolios. Ownership is highest among those in their 40s at 31%, followed by people in their 30s and 50s.
The report also noted a shift among retail investors from U.S. Big Tech stocks to crypto-related shares. Their share of the top 50 net-bought equities jumped from 8.5% in January to 36.5% in June, before easing slightly to 31.5% in July.