South Korea’s financial service commission (FSC) has ordered exchanges to suspend new crypto lending products until formal guidelines are in the area, citing risks of mounting users and market stability.
Regulators point to a Recent incident in Bithumb Where more than 27,000 customers were able to lend lending services in June, with 13% forced to destroy after collateral values that fought against them.
Moving FSC will come days after Analysts in Galaxy Digital Na -Published A report in which they have been the growing amount of action in the crypto markets as a remembrance.
Administrative guidance, from FSC provides existing loans to operate their course but Bar is to control new lending services. Officials said that if the platforms ignored the directive, site inspections and other administration actions would be followed. Formal lending guidelines are expected in the coming months.
Korean crackdown lands while crypto use the whole world back to bull-market levels. Galaxy’s report shows crypto-collateralized loans that jump 27% on Q2 to $ 53.1 billion, the highest since early 2022.
Last week $ 1 billion waves of extermination.
Analysts are warning that stress points are already shown throughout the system: Defi Liquidity Crunches, Eth Staking Exit Queues, and expanding the spread between on-chain and over-the-counter dollar lending rates.
However, not everyone agrees with the strategy taken by Korean authorities. Bradley Park is arguing DNTV Research is to better need care, and not a shutdown.
“The rational approach is UI/UX upgrading, Danger Displays, and LTV controls to manage safe exposure,” Park told CoinDesk on a note, noting that most of the exchange exchanging was in stablecoins used to generate short positions.
He added that the real concern of the regulator could be distortion in the market, such as the negative premium kimchi, rather than the service itself.
Park said transparency gaps are also complicated by administration: Bithumb announced the size of its lending activityBut upbit, the country’s largest exchange, is not. That opacity can make it more difficult for regulators to judge systematic risks and may be a major factor behind the blanket suspension.
“Until these structural issues are addressed, the opening can be reinstated time; the priority must understand the mechanism and adoption of a data-driven design, rather than blanket restrictions,” he concluded.
