South Korea’s Financial Services Commission instructed exchanges to pause new crypto lending while it finalizes guidance. Here is a user-first explainer with action paths, comparisons, and a self-audit kit.
Decision tree / what should you do right now?
Are you a user with an active loan?
Check whether renewals are allowed under your platform’s notice.
If LTV is tight, consider partial deleveraging to avoid forced liquidations.
Document fees and notice periods for redemptions.
Are you evaluating a new loan?
New originations are paused. List alternatives: over-collateralized stablecoin loans offshore may carry separate risks and rules.
Avoid chasing yield substitutes labeled as “fixed” without transparent risk.
Persona playbook
| Persona | Near-term action | Why it helps |
|---|---|---|
| Retail borrower at high LTV | Repay or top up to widen buffer | Reduces liquidation probability |
| Yield seeker in “earn” | Rebalance to transparent custody or short-duration instruments | Cuts hidden leverage |
| Market maker | Inventory management with exchange haircuts in mind | Keeps spreads stable during guidance window |
| Compliance officer | Freeze new lending features, build disclosure drafts | Prepares for rapid re-enablement post-guidance |
What regulators are signaling
Risk lens: opaque leverage channels and liquidation cascades.
Interim stance: pause new lending while drafting collateral, liquidity, and disclosure standards.
User protection: allow repayments and maturity extensions where specified.
Comparative map / how others approach retail lending
| Jurisdiction | Retail lending stance | Typical requirements |
|---|---|---|
| South Korea | Pause on new products pending guidance | Collateral haircuts, disclosure, liquidity buffers expected |
| Singapore | Heavily supervised retail access | Suitability checks, leverage limits |
| EU (MiCA environment) | Varies by member state | Clear labeling, custody segregation, audits |
Self audit kit for exchanges
Product inventory: list anything with implicit yield or leverage.
Risk labels: translate complex mechanics into plain language.
Liquidity buffers: define intraday thresholds and stress-test frequency.
Governance: empower risk to veto product launches until guidance arrives.
Client comms: single FAQ page with time stamps and change log.
Myth vs. fact
| Claim | Reality |
|---|---|
| “All loans are shut down immediately” | The focus is on new lending products. Existing contracts often allow repayment or extension, subject to platform rules. |
| “Guidance will take months” | Authorities have trailed near-term guidance windows. The exact timeline can still shift. |
Macro ripple effects to watch
Lower retail leverage can reduce intraday volatility in local markets.
Pricing may improve for high quality collateral as haircuts formalize.
Exchanges that standardize disclosures early could gain share post guidance.
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