South Korean Financial Regulatory Cryptocurrency is preparing new guidelines to address lending services, especially offering high leverage to retail investors. This initiative declared on Thursday develops about investor protection and potential RISC being bound by unstable market conditions.
Cast has established an engine to develop a regulator Fremwork that targets Crypto Lending practices to report from Yonhap News Agency (YNA), Financial Services Commission (FSC) and Financial Supervisory Services (FS).
The step follows recent major domestic exchange, bitmas and offer proposals, which introduced high-risk linding options, allowing users to borrow significant amounts relative to their collections.
Joint task force to flow new borrowed guidelines
The task force will include Memors from FSC, FSS, and Digital Asset Exchange Alliance (DXAA), which is a self-credential body that is made up of the fact that South Korean exchanges: upbuets: upbook, Bithamb, Coinone, Coinone Korbit and Gopax.
The primary goal of the group is to establish clear rules controlling borrowing products, which have reached adoption without standardized investors with safety measures.
As a YNA report, Bitehumb has allowed users to borrow up to four times their accumulated collateral, which upbit has provided loans to the asset values of 80% of users.
Regulators are afraid that such high leverage RTAL may expose investors for rapid and serious losses that sink the market swings. The upcoming guidelines are expected to add increased transparency to leverage limits, assets and user eligibility criteria, compulsory risk oblivion, and digital asset linding activities.
Regulators have also urged crypto exchanges to review high risk or lagal class services. This includes prasad and fiat-based lending people with extreme length, which can fall into regulatory gray areas.
For FSC, the goal is to create a string approach that can serve as a basis for the broader digital asset law in the future.
Part of a broad push for crypto oversight
The establishment of the Linding Task Force aligns with widespread efforts to strengthen inspection in the Digital Asset area of South Korea.
Earlier this year, Bank of Korea announced the formation of a virtual asset team by integrating its central bank Digital Currency (CBDC) Research Division with a comprehensive mandate to monitor Stabecrim and other crypto-related deviliation.
The team will cooperate with the aging government agency of the upcoming legislative process for cryptocurrency. Global regulators are also paying close attractions for crypto lending after high-profile collapse of platforms such as Celsius and Blockfi in 2022, causing many investors to face significant damage.
The objective of the proposed rules of South Korea is to prevent similar incidents by determining Clelor boundaries
The draft guidelines are expected to be released next month, the industry stakeholders estimate strict requirements on how to manage services lending to Crypto exchanges.
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