South Korea Introduces Guidelines for Virtual Asset Lending Services

According to PANews, South Korea's financial regulatory authorities have introduced the first set of guidelines for virtual asset lending services. In response to increased investor risks due to intensified competition among exchanges, the regulations prohibit leverage and cash lending, set personal limits, and cap fees to prevent short-selling activities. On September 5, the Financial Services Commission announced the implementation of the self-regulatory 'Virtual Asset Lending Business Guidelines,' developed by the Financial Supervisory Service and DAXA. The new guidelines focus on three core areas: service scope limitations, user protection, and market stability. They explicitly ban excessive leverage lending and cash lending in Korean won, requiring exchanges to use their own assets for services and prohibiting third-party delegation or indirect lending models. In terms of enhanced user protection measures, first-time users must complete DAXA's online education and adaptability test. Loan limits are set between 30 million to 70 million Korean won, depending on trading experience. Users must be notified in advance of any forced liquidation risks and allowed to add collateral. The annual fee rate is capped at 20%, and exchanges must publicly disclose the lending status and liquidation cases for each cryptocurrency. For market stability, the guidelines restrict lending targets to the top 20 market cap assets or those listed on at least three Korean won exchanges, excluding assets under trading warnings or suspected of abnormal trading. An internal control mechanism is required to prevent excessive concentration in specific cryptocurrencies, which could lead to market volatility.