South Korean financial authorities have temporarily halted new crypto lending services following a major liquidation incident in the crypto market.
The decision is seen as a reflection of global concerns about the risk of rising leverage in the digital asset market.
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The decision by the country’s Financial Services Commission (FSC) follows an incident at local exchange Bithumb. Regulators revealed that more than 27,000 users used its lending services in June alone, with 13% of these users forced into liquidation due to market price fluctuations.
Authorities announced that crypto lending services would be suspended until a “Virtual Asset Leasing Services Guide” was prepared. The statement stated that “user protection mechanisms are inadequate” and there are “concerns about harming healthy commerce.”
Meanwhile, Galaxy Digital’s latest report revealed that leverage usage is rapidly increasing in the crypto ecosystem. According to the report, the total value of crypto-collateralized debt across both centralized and decentralized projects has reached $44.25 billion, representing a nearly 30% increase compared to the previous quarter.
*This is not investment advice.
