• Leverage reduced from 4× to 2×, halving the maximum borrowing power available to traders.

• Loan limit slashed by 80%, declining from 1 billion won ($726,000) to 200 million won ($145,000).

These changes apply across the board, even to “qualified investors” with trading volumes exceeding 100 billion won (~$72 million) over three years.

Background & Regulatory Context

• The crypto lending service, launched in July, was paused on July 29 due to "insufficient lending volume" and then resumed on August 6 with revised terms.

• Amid growing concerns over risk and investor protection, South Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) convened a task force with major exchanges and the Korea Institute of Finance. Their goal: to draft detailed guidelines targeting leverage limits, asset eligibility, and transparency.

Market Risk & Investor Landscape

• Officials are particularly alarmed by Bithumb’s prior 4× leverage, double the stock market’s typical 2:1 limit, especially given relatively weaker investor protections in crypto lending.

• This tightening reflects wider investor behavior: over 25% of Koreans aged 20–50 now hold crypto, which makes up about 14% of their financial portfolios—with the highest ownership (31%) among those in their 40s.

Strategic & Market Implications

• Investor Protection: These adjustments reduce the potential for mass liquidations during rapid market swings, thus lowering systemic risk.

• Platform Revenue: Restrictions on leverage and lending volumes may dampen revenue from high-margin lending products.

• Regulatory Alignment: By proactively scaling back high-risk offerings, Bithumb and peers may avoid harsher, prescriptive rulings—helping shape a more stable regulatory landscape.

• Competitive Landscape: As other exchanges like Upbit also reconsider their lending terms (e.g., excluding USDT), Bithumb's compliance could offer a reputational edge among regulators and institutional clients.

Looking Ahead

With the FSC and FSS aiming to unveil formal guidelines “as early as the end of the month,” Bithumb’s move can be seen as both a reaction and a preemptive measure to align with the emerging regulatory framework.

Summary Table

Bottom line: Bithumb's policy shift on August 11–12 underscores a broader push toward constraining high-leverage lending—prioritizing investor safety amid rapid crypto adoption—and signals proactive alignment with looming regulatory norms in South Korea.