The crypto exchange Bithumb has made “significant reductions” to the scale of its crypto lending services amid ongoing concerns from financial regulators.
Per the South Korean newspaper Kookmin Ilbo, the trading platform has reduced its leverage ratio from x4 to x2.
It has also slashed its maximum lending cap by 80% from 1 billion won ($718,298) to just 200 million won ($1,436).
The move represents a major climbdown for Bithumb, which only launched the services in July.
Bithumb Crypto Lending Rethink
Bithumb was also forced to temporarily suspend crypto lending on July 29, claiming this was due to “insufficient lending volume.”
It resumed the service on August 8. But Kookmin Ilbo quoted a Bithumb spokesperson as saying:
“After a comprehensive review of the entire service, we have made some adjustments to protect investors and improve the quality of our services.”
The exchange added that the new terms would also apply to “qualified investors” (those with a cumulative trading volume of over 100 billion won over the past three years).
Bithumb did not mention regulatory pressure. But the media outlet agreed that the “move appears to reflect criticism from financial authorities, who claim it is offering excessive leverage in the absence of a clear legal framework.”
Regulators Set to Release Guidelines
The Bithumb move follows a hastily arranged meeting late last month of all five fiat-trading crypto exchanges at the behest of the Financial Services Commission (FSC) and Financial Supervisory Service (FSS).
The regulators voiced concerns about leverage-associated risks. They also expressed concerns about a lack of comprehensive investor protection protocols.
They complained that some services “offer excessive leverage to users.” The FSC and the FSS agreed that some platform users lack understanding about crypto lending.
Bithumb reportedly responded by rethinking its operating limits during the service’s downtime.
Rival platforms also appear to be scaling back their own offerings. Upbit has announced it will exclude Tether (USDT) from its new crypto lending services.
Kookmin Ilbo added that unnamed industry sources predict that the FSC and FSS will release a set of comprehensive guidelines for crypto lending “as early as the end of the month.”
The sources suggested that the regulatory framework would likely reflect many of the protocols used to police leveraged investments in the South Korean stock market.
Bithumb initially said it would be providing lending services on 10 cryptoassets including Bitcoin (BTC).
The post Bithumb to Scale Back Crypto Lending Services After Regulatory Pressure appeared first on Cryptonews.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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