• The South Korean Financial Service Commission (FSC) has temporarily put an end to all crypto lending services within the country.
• According to the details shared, the FSC highlighted that since the introduction of the crypto lending services, about 13% of investors have faced price liquidation, which in turn has affected the stability of stablecoin prices within the country.

Over the years, different countries and continents continue to make their different stances on cryptocurrency and its adoption. For South Korea, there has been a friendly adoption of blockchain and cryptocurrency.

The country has shown open arms to cryptocurrency adoption but at the same time set up laws and regulations that would help put exchanges and crypto firms in check while also protecting citizens of the country. A few hours ago, the country’s financial service commission (FSC) ordered the temporary pause of all crypto lending services within the country.

The FSC Temporary Halt on Crypto Lending Services

Earlier today, the Financial Services Commission (FSC) confirmed that it has directed all South Korean crypto exchanges to stop all lending activities. According to the details they officially shared, the new decision would take effect immediately and will stay in place until new rules for crypto lending are introduced.

Also Read: Crypto Regulation Shift to Watch Out For

Although crypto-based lending is still new in South Korea, it was just launched this year by top exchanges like Upbit and Bithumb. These products gave users the opportunity to borrow Korean won and other cryptocurrencies using their holdings as collateral.

Just last month before this temporal sanction, the FSC asked crypto trading platforms to review their lending systems, warning that the introduction of these services could be misused for fraud and might simultaneously cause financial damage. Following this request, both Upbit and Bithumb suspended their lending offerings. However, Bithumb later restarted the service with tighter conditions.

During this recent update, the FSC recorded that about 27,600 people borrowed 1.5 trillion won ($1.1 billion) during the first month of one exchange’s lending product, but due to the cryptocurrency market instability, about 13% of the investors faced liquidation.

The FSC also pointed out that the lending activities caused an unexpected sell-off of USDT, which caused the price of stablecoin to fluctuate a bit.

Also Read: China Merchants Bank Subsidiary Rolls Out 24/7 Cryptocurrency Trading Platform in Hong Kong