South Korea's Financial Services Commission (FSC) has ordered exchanges to halt the launch of new crypto lending products, following rising concerns over market stability and user risks. The decision is prompted by a recent liquidation event that affected over 27,000 customers, with 13% forced into liquidation as collateral values fluctuated. The FSC's directive allows current loans to proceed but prohibits any new lending services until further guidelines are established. This move comes amidst increasing leverage in global crypto markets, which registered a 27% rise in crypto-collateralized loans to $53.1 billion in the second quarter of 2025. Critics of the FSC's blanket suspension argue that enhancements to existing safeguards and transparency measures could better mitigate risks rather than shutting down the lending market entirely. They emphasize the need for clearer oversight, particularly given the lack of transparency from some exchanges compared to others.

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