Seoul’s top crypto platform, Bithumb, has sharply scaled back its coin-lending service only a month after introducing it.
On July 4, Bithumb launched its much-anticipated lending program, offering loans with 4x leverage on ten major cryptocurrencies, including Bitcoin, Ethereum, Ripple, and Tether. Borrowers could use either crypto or Korean won as collateral.
But the rollout didn’t last long.
Bithumb Cuts Leverage, Loan Limits
As per a report from Kookmin Ilbo, Bithumb paused the service on June 29 due to low lending volume. After a full internal review, it resumed on July 8 but with tighter conditions.
- Leverage was cut from 4x to 2x
- The maximum loan amount was reduced by 80%, from 1 billion won to just 200 million won
Now, even investors with over 100 billion won ($72 million) in trading volume over the past three years can only borrow up to 200 million won through Bithumb’s lending service.
Regulators Push for Safer Crypto Lending
Bithumb’s recent changes come after Korean regulators raised alarms about risky high leverage in crypto lending. On June 31st, financial authorities and crypto exchanges teamed up to create safer rules for lending. They aim to set clear leverage limits, define eligible assets, and ensure transparent risk disclosure.
They also warned that, with a lack of user understanding, high leverage could cause major losses if crypto prices fluctuated sharply.
After talks with financial authorities, Bithumb decided to review and lower its service limits before restarting coin lending. Meanwhile, Upbit has removed Tether from its lending service due to legal concerns.
Industry insiders expect new virtual asset lending rules to be released soon, likely including strict limits on leveraged coin trading, similar to stock market regulations.
Investors Shift from Big Tech to Crypto Stocks
Alongside these changes, South Korean retail investors are shifting from U.S. Big Tech stocks to crypto-related shares, especially those tied to stablecoins. From January to April, monthly Big Tech buys averaged $1.68 billion but dropped sharply to $260 million by July.
Meanwhile, crypto stocks surged, making up 36.5% of the top 50 purchases in June. This shift is driven by growing stablecoin use and the impact of the recently introduced US GENIUS Act.
Bithumb’s retreat from high-leverage lending highlights a push for safer crypto lending practices in the industry. Definitely one to watch.
