South Korea’s Monetary Providers Fee (FSC) has introduced new guidelines for crypto lending providers provided via centralized exchanges.
South Korea Introduces New Regulation on Crypto Loans: Curiosity Fee Cap 20%
The Fee said in a press launch that the regulation “goals to strengthen person safety, making an allowance for world examples.”
Beneath the brand new laws, leveraged loans exceeding collateral worth are prohibited. Moreover, a 20% cap has been imposed on crypto mortgage rates of interest. Merchandise requiring customers to repay with money are additionally banned because of their violation of credit score laws.
The FSC emphasised that corporations providing these providers might solely use their very own capital and won’t be permitted to bypass the foundations not directly via third-party providers. Customers’ credit score limits shall be decided primarily based on their transaction historical past and expertise. Moreover, traders shall be required to be notified upfront of any liquidation dangers.
The brand new guidelines will solely apply to the highest 20 cryptocurrencies by market capitalization, or to crypto property traded on a minimum of three licensed native exchanges. If a cryptocurrency is categorized as “consideration,” lending providers for that asset may also be suspended.
The regulation comes into impact right now, and compliance shall be overseen by the Digital Asset Exchanges Affiliation (DAXA). The FSC plans to transpose the foundations into authorized laws primarily based on implementation outcomes.
This transfer follows final month’s FSC order to droop lending providers to Upbit, Bithumb, and different exchanges.
*This isn’t funding recommendation.
