Crypto Lending in South Korea: Shut Down or Just a Coffee Break?

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In the ancient, mysterious realm of South Korean finance-where men wear suits so sharp they could slice bread-the Financial Services Commission hath descended from its bureaucratic tower, waving scrolls (probably stapled memos) and proclaiming, “Enough with the lending sorcery! Pause thy alchemy!”

  • The Regulatory Wizards have demanded that all South Korean crypto exchanges put their lending wands down, citing magical fog (legal uncertainty), spells gone wrong (fraud), and users vanishing their savings.
  • Guidelines are allegedly coming soon, presumably written on enchanted parchment designed to make things slightly less chaotic than a Discworld street market.

August 19th (possibly a date foretold by a nervous accountant) arrived with the grand announcement: crypto lending services-introduced mere moons ago by the likes of Upbit and Bithumb-are simply too much like trying to teach a goldfish to juggle. The FSC decided they’re in a “legal gray area”, which is somewhere between a shadowy alley and a bureaucratic blender-unnecessary risks and users potentially getting turned into unpaid interns.

For those not keeping a diary: crypto lending exploded onto the scene with the same subtlety as a goblin at a tea party. Suddenly everyone could borrow Korean won or magical digital coins, waving collateral around like it was last year’s fashion. Easy money! Or, as the regulators saw it: easy way for goblins, trolls, or garden-variety fraudsters to have fun.

Back in late July, the FSC did what it does best-worry loudly. They demanded all crypto exchanges do the accounting version of “a long hard look in the mirror”: reconsider these risky lending shenanigans before someone ends up lending their pants and forgetting to get them back.

Thus, the mighty Bithumb and Upbit paused their services. Briefly. Bithumb then attempted to bring lending back, but only after implementing so many regulations it was easier to borrow money from your grandma (assuming she’s less strict than the FSC).

All this drama is, we are told, a temporary fix. The regulatory sages are busy writing new rules (possibly with a feather quill or an Excel spreadsheet). In the meantime, borrowers are allowed to extend their magical loan quests or pay back what they owe, but the moment an exchange shows signs of mutiny, the FSC is ready to don its trench coat and do some on-site snooping.

Just How Big Is This Crypto Lending Cauldron? 🧙‍♂️💰

According to the chronicles (a translated press release, so take with a grain of salt, or maybe a whole salt mine), roughly 27,600 brave souls borrowed the grand sum of 1.5 trillion won (or about $1.1 billion, if your abacus is rusty) in the first magical month of lending. Alas! Volatility struck! Thirteen percent were forced to liquidate, which in Discworld probably means “dispatched by imploding poultry.” The agency refused to name names because, well, rumors are much more fun.

When USDT lending appeared-like summoning a fresh monster-waves of sell orders crashed down, as thunderous as Cohen the Barbarian at a bankers’ convention. The stablecoin price promptly sank, disrupting the market with all the grace of a drunken Nac Mac Feegle.

Meanwhile, since President Lee Jae-Myung has taken office, South Korea’s crypto stance has gone from “mild panic” to “enthusiastic risk-taking”, not unlike an Ankh-Morpork wizard discovering a loaded crossbow. The president is swinging for crypto assets pegged to the won and even crypto-backed ETFs. Sue me if you wish, but it sounds like someone finally found the ‘Speculate Wildly’ spell in the back of the grimoire.

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2025-08-19 10:18