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Bithumb Cuts Crypto Lending Leverage and Loan Limits by 80% Amid Scrutiny
In a significant move aimed at reducing risk exposure, Bithumb has drastically reduced its loan limits and leverage in response to regulatory scrutiny. The exchange announced an unprecedented cut of 80% in loan limits and a halving of the maximum lending leverage from 4x to 2x.
This dramatic shift marks a substantial departure from the previous terms, which allowed for much higher exposure to high-risk lending products. Bithumb’s decision is likely a response to growing concerns over excessive risk-taking by investors, as well as government agencies’ efforts to curb reckless speculation in the cryptocurrency market.
According to sources familiar with the matter, Bithumb has reduced its loan limits to 200 million won (approximately $145,000), a massive decrease from the previous cap of 1 billion won ($726,000). This reduction applies even to high-volume traders who have accumulated over 100 billion won ($72 million) in cumulative trading activity over the last three years.
Furthermore, the exchange has significantly reduced its lending leverage ratio from 4x to 2x, a move designed to limit risk exposure for users. This adjustment is expected to curb reckless lending practices and minimize potential losses for investors.
Bithumb’s drastic actions come as South Korea becomes increasingly vigilant about crypto lending services that offer high-risk products to traders. The Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have recently established a task force aimed at drafting new guidelines for crypto lending services, focusing on issues such as leverage limits, asset eligibility, and transparency regarding risks.
The exchange has reportedly worked closely with regulators to ensure its lending service aligns with these new regulations. As the regulatory environment becomes more stringent in South Korea, it is likely that other exchanges will follow suit in an effort to maintain a positive reputation and avoid punitive measures.
As the crypto market continues to evolve, investors are advised to remain cautious when engaging in high-risk activities.
Source: coincentral.com
