Financial authorities launch ‘Coin Lending TF’… Guidelines to be prepared by next month

The financial authorities will prepare guidelines related to virtual asset lending services by next month.

The Financial Services Commission and the Financial Supervisory Service announced that on the 31st, together with the Digital Asset eXchange Alliance (DAXA) and five virtual asset exchanges, they have formed a task force (TF) at the Government Complex Seoul to establish 'Guidelines for Virtual Asset Lending Services' and held the first meeting. The TF plans to complete the guidelines by next month. The contents and progress of these guidelines will be reflected in the phase 2 virtual asset legislation.

The financial authorities launched the TF due to concerns over insufficient investor protection mechanisms for virtual asset lending services. Recently, South Korea’s two major exchanges, Upbit and Bithumb, have successively introduced virtual asset lending services. However, there have been ongoing concerns that users could incur significant losses if the price of lent virtual assets fluctuates sharply.

Accordingly, the guidelines are expected to specify details regarding virtual asset lending services. The industry anticipates that the guidelines will address matters such as whether leverage is permitted, the scope of eligible users, the range of lendable virtual assets, and disclosure plans for lending status by asset.

Meanwhile, the authorities requested at the meeting that domestic virtual asset exchanges reconsider services with high user damage risk, such as leverage offerings, and those with legal risks including monetary lending.