Crypto Lending in South Korea Paused: Regulators vs. Rampant Borrowing 🚨💰

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If there’s one thing I love about South Korea, it’s their ability to do things with a breathtaking sense of urgency and a mild disregard for personal downtime-unless it’s karaoke, in which case all bets are off. This vigor apparently extends to their relationship with cryptocurrency, too. South Korea’s Financial Services Commission (FSC)-imagine a group of very serious people in uncomfortable suits, perpetually haunted by the memory of the 1997 Asian financial crisis-has recently decided to play party pooper for local crypto exchanges. The regulator marched in and instructed exchanges to “please refrain from lending crypto until further notice.” Or, as their press release probably read: “Cease and desist, before things get even weirder.”

To be fair, lending crypto is already pretty weird. It’s not like you can drive it off the lot or store it in your shed next to that faulty treadmill. Major players such as Upbit and Bithumb were happily letting people borrow against their deposits-Upbit was basically giving Korean won loans up to 80% of your stash, while Bithumb, in a stunning display of bravado, let users borrow four times as much as their assets. If that sounds slightly mad, congratulations on still possessing a survival instinct.

The result? Utter pandemonium, naturally. In just one month, 27,600 eager beavers borrowed a whopping 1.5 trillion won (about $1.1 billion, or enough to fund a moderately ambitious K-pop group for a decade). Then, as is customary, the market wobbled like a toddler after two cans of soda. Thirteen percent of borrowers had to sell their assets, and not in the fun “I just made a killing on Dogecoin” sort of way, but the “I bought at the absolute peak and now have regrettable receipts” fashion. Oops.

Stability-what stability? The lending mania also smashed stablecoin prices. USDT lending led to such a stampede of sell orders, even the coins weren’t sure whether they were stable anymore. Regulators predictably panicked at the prospect of financial entropy: borrowers can repay or extend loans, but if you were hoping for fresh crypto lending, you’ll have to find a new hobby for now. Might I suggest bird watching? No leverage required.

South Korea’s Crypto Makeover: Now With More Bureaucracy!

As if all this wasn’t exciting enough, the government’s ambitions stretch even further. President Lee Jae Myung’s team is cooking up plans for spot Bitcoin ETFs, apparently scheduled to debut by the end of 2025-just in time for everyone to forget about this year’s hair-raising episodes and develop new anxieties. Meanwhile, they’re toying with the idea of a stablecoin that’s chained to the Korean won-because nothing says “cutting edge financial innovation” quite like tying yourself to a currency famous for its rollercoaster personality. A bill is expected to hit the National Assembly this October, where it will probably be debated ad nauseam by very serious people, while everyone else is either trying to figure out Squid Game coin or just hoping for a less heart-stopping news cycle. 🚀

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2025-08-19 09:46