Bithumb cuts crypto lending limits by 80% in major policy shift

South Korean exchange Bithumb has slashed its maximum crypto lending limits by 80% and halved leverage from 4x to 2x, as part of a major policy shift aimed at reducing investor risk. The changes accompany the resumption of its month-old lending service, which was suspended on July 29 due to what the company described as “insufficient lending volume,” according to a report from the Kookmin Ilbo.

“After a comprehensive review of the entire service, some adjustments have been made to protect investors and improve service quality,” Bithumb reportedly said.

The new borrowing cap of 200 million won ($145,000) applies even to investors with more than 100 billion won ($72 million) in cumulative trading volume over the past three years.

Regulatory pressure and new lending guidelines

The policy overhaul comes as South Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) step up oversight of the crypto lending sector. On July 31, the two agencies, in collaboration with the Korea Institute of Finance and the Digital Asset eXchange Alliance (DAXA), launched a task force to develop “Virtual Asset Lending Service Guidelines.”

The guidelines are expected to draw on international standards, stock market regulations, and domestic market needs to address leverage limits, eligible assets, and transparency requirements. Authorities have urged exchanges to reassess high-risk or legally ambiguous services, particularly those offering excessive leverage or fiat-based loans.

Bithumb reportedly consulted with regulators before resuming its lending operations under the stricter framework.

South Korea’s growing crypto participation

The changes come against a backdrop of strong retail engagement in South Korea’s crypto market. A report from the Hana Institute of Finance shows that more than one in four South Koreans aged 20 to 50 own cryptocurrency, with digital assets making up an average of 14% of their portfolios. The highest ownership rate is among those in their 40s at 31%, followed by individuals in their 30s and 50s.

Retail investors have also been shifting from U.S. Big Tech stocks to crypto-linked equities, with their share of the top 50 net-bought equities rising from 8.5% in January to 36.5% in June, before easing slightly to 31.5% in July.

Market outlook

Bithumb’s revised lending terms reflect a broader push by South Korean regulators to mitigate risks in a rapidly evolving digital asset sector. For investors, the tighter limits may reduce exposure to excessive leverage, while for the exchange, they could bolster compliance ahead of the forthcoming crypto lending service guidelines.

With crypto adoption on the rise and regulatory frameworks taking shape, the South Korean market is likely to remain a key testing ground for balancing innovation with investor protection.