The virtual asset exchange will no longer be able to provide lending services that exceed the collateral value and monetary lending (repayment at the value of the Korean won at the time of lending).
The Financial Services Commission announced on the 5th that it will implement guidelines for virtual asset lending. The Commission noted that "the situation is spreading where user damage concerns are raised as some virtual asset exchanges provide lending services using leverage."
The guidelines clearly define the scope of virtual asset lending services. First, lending services that provide more coins than the assets entrusted as collateral will be restricted. Monetary lending services that may violate the framework act on registration of credit businesses are also prohibited.
It was mandated that operators utilize their own assets when providing virtual asset lending services. To prevent regulatory circumvention, the provision of indirect lending services through partnerships or consignment with third parties is restricted.
Measures to protect users of virtual asset lending services have also been established. Businesses that offer virtual asset lending services must first confirm whether customers using the service for the first time have completed the online training and qualification test conducted by the Digital Asset Exchange Alliance (DAXA). Similar to stock market short selling, user-specific lending limits must be set based on the user's lending service experience and transaction history.
If there is a risk of forced liquidation during the lending period, users must be notified in advance. If users provide additional collateral to prevent forced liquidation, the business operator must manage it within the lending limits.
The fees for the lending service will not exceed the maximum interest rate of 20% per annum established by other credit-related laws, and there will also be an obligation to disclose key matters such as the fee structure and lending status of virtual asset items, as well as the status of forced liquidations.
Considering the impact on market prices, the available virtual assets for lending are limited to those ranked within the top 20 by market capitalization or those traded on three or more Korean won exchanges. Criteria for virtual assets whose lending and collateral usage are restricted, such as those subject to transaction warnings or suspicious trading, have also been established.
The Financial Services Commission plans to swiftly promote the legal establishment of related regulations based on the contents of the guidelines and the operational progress in the future.