On the 19th, the financial authorities announced that they would guide a suspension of new operations at virtual asset exchanges until guidelines for virtual asset lending services are established.
The Financial Services Commission and the Financial Supervisory Service sent an administrative guidance notice to virtual asset exchanges requesting a suspension of new operations for virtual asset lending services until guidelines are created, effective from today.
However, prior to the implementation of the guidelines, repayments and extensions of existing lending service contracts are permitted. After the guidelines are implemented, new operations for virtual asset lending services may resume within the scope defined by the guidelines.
Recently, concerns have been raised about user losses as virtual asset exchanges launched services allowing users to lend virtual assets against collateral of their held assets or Korean won. Bithumb and Upbit introduced virtual asset lending services on the 5th of last month.
There have also been actual cases of damage. According to the Financial Services Commission, about 27,600 people used Bithumb's virtual asset lending service for approximately 1.5 trillion won in just over a month, yet 13% (3,635 individuals) experienced forced liquidation. Additionally, right after the launch of the lending services for Tether (USDT) by Bithumb and Upbit, the sales volume surged, causing Tether prices to unusually drop on these exchanges.
A financial authority official noted, "If new operations continue without appropriate user protection measures, there is a concern that user damages could accumulate before the guidelines are established," adding that "new market entrants are also requesting clear guidelines for the sake of predictability."
The financial authorities plan to conduct on-site inspections of operators if user damage is expected to continue following the administrative guidance.