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Bithumb has taken drastic measures to address concerns over high-risk crypto lending products. In a surprising move, the exchange has cut its loan limits and leverage ratio by an astonishing 80%. The decision comes on the heels of regulatory scrutiny in South Korea.
It appears that Bithumb is attempting to mitigate risk exposure by drastically reducing the amount investors can borrow. Specifically, the maximum lending leverage has been halved from 4x to a more conservative 2x. This significant adjustment aims to protect users and ensure compliance with emerging regulations.
To put this drastic reduction into perspective, the exchange’s previous loan limits have been cut in half. The new caps will limit borrowers to loans of no more than 200 million won (approximately $145,000). Surprisingly, even high-volume traders who have accumulated over 100 billion won ($72 million) in cumulative trading activity over the last three years are not exempt from these new caps.
It is important to note that Bithumb’s decision comes as part of a broader effort by regulatory bodies to curb the risks associated with high-risk lending products. The Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have established a task force focused on drafting guidelines for crypto lending services. This new guidance aims to address issues related to leverage limits, asset eligibility, and transparency around potential risks.
This move by Bithumb sends a strong message about the exchange’s commitment to protecting users’ interests while adapting to regulatory changes.
Source: coincentral.com
