Korean Crypto Regulation: Urgent Warning Issued to Exchanges Over Lending Services

Key Points

1. The FSS warned Upbit and Bithumb about their crypto lending services due to perceived legal risks, leading to Upbit suspending its USDT lending service and Bithumb halting new loan applications.

2. A dedicated task force will be established to develop a self-regulatory framework for crypto services, involving collaboration between regulators and industry participants.

3. Crypto lending poses inherent risks, including legal and financial complexities, which regulators aim to address through stricter oversight.

4. The FSS's actions reflect South Korea's broader regulatory approach to balance innovation with consumer protection in the crypto market.

5. Users and exchanges are advised to stay informed about regulatory changes and ensure compliance with evolving frameworks.