The financial authorities are preparing guidelines for lending services to strengthen user protection in virtual assets. Recently, major virtual asset exchanges have successively launched or announced the introduction of leverage-based lending services, prompting the authorities to manage risks such as excessive leverage provision, legal uncertainty, and monetary lending.
On the 31st, the Financial Commission and the Financial Supervisory Service officially launched a task force (TF) to prepare the 'guidelines for virtual asset lending services' (tentative) in cooperation with the Digital Assets Exchange Council (DAXA) and major virtual asset exchanges. The TF held a kickoff meeting at the Seoul Government Complex and indicated that it would provide a draft as early as August.
Recently, domestic won virtual asset exchanges are increasingly introducing lending services that allow users to borrow virtual assets using their deposited money or held coins as collateral. Bithumb operates a virtual asset lending product under the name 'Lending Plus', while Upbit has a service called 'Coin Lending', and some small to mid-sized exchanges are also launching similar services.
However, there is currently no clear regulatory framework for such services in the 'Virtual Asset User Protection Act' and related regulations. As a result, leverage-based risky products are being launched without regulation, and exchanges are operating services under legally uncertain conditions. The authorities believe that this situation could lead to user harm.
In particular, some lending services have been found to provide users with excessive leverage. Concerns have been raised that investors could incur unbearable losses if they use leverage without sufficient information and market prices change rapidly. Accordingly, the authorities have requested exchanges to reconsider the operation of services with legal risks such as leverage provision and monetary lending.
Through this TF, the authorities plan to comprehensively review the characteristics of the domestic and international virtual asset markets, the regulatory trends in major countries, and similarities with the stock market. The TF aims to establish minimal standards that can be complied with collectively across the industry.
Discussion topics include ▲whether to allow leverage provision ▲the scope of applicability of suitability principles ▲user education and advance notification systems ▲restrictions on service recipients ▲the range of assets available for lending ▲disclosure methods by lending items, among others. Additionally, measures for internal controls and risk management systems within exchanges will also be reviewed.
The authorities plan to disclose a draft guideline in August after discussions in the TF and are considering legal adjustments thereafter. A financial authority official emphasized, 'We plan to establish minimum regulations across the entire service for user protection and simultaneously promote institutionalization in the future.'