Bithumb, a leading South Korean crypto exchange, has drastically revised its Coin Lending service, reducing loan limits by 80% and halving leverage due to increased regulatory scrutiny.
These changes reflect pressure from South Korean regulators aiming to curb systemic risks, impacting market dynamics and potentially decreasing speculative lending activities on cryptocurrency platforms.
Bithumb Slashes Coin Lending Limits by 80%
Bithumb, a major South Korean crypto exchange, has announced significant changes to its Coin Lending (Lending Plus) service. The maximum loan limits are cut by 80%, while lending leverage is halved, responding to regulatory scrutiny and market risks. A Bithumb spokesperson stated, "After a comprehensive review of the entire service, we have made some adjustments to protect investors and improve the quality of our services."
In response to financial authorities' pressure, Bithumb adjusts its lending service. Both the Financial Services Commission and Financial Supervisory Service are vital in overseeing these changes. Bithumb aims to protect investors and maintain service quality.
Reduced Leverage to Curb Speculation
The changes are expected to significantly reduce speculative activities by limiting borrowing capacity. This measure could lead to a more stable trading environment, aligning with regulatory objectives to minimize systemic risk within cryptocurrency exchanges.
Potential financial impacts include a decrease in lending revenue as Bithumb reduces leverage and loan limits. Historical trends suggest such actions may stabilize markets, as reduced leverage could lessen the likelihood of liquidation events during market downturns.
Resumption of Service Reflects Regulatory Trends
In July 2025, Bithumb halted its lending service amid low volumes, resuming in August with reduced caps. Similar moves by exchanges like Upbit indicate a trend towards tightened lending regulations in South Korea's cryptocurrency industry.
Kanalcoin experts suggest these restrictions may stabilize trading volumes and enhance investor confidence, aligning with global trends of increased regulatory oversight. Historical data supports that decreased leverage can mitigate the effects of market volatility.