Bithumb & Upbit Face Heat Over High-Stakes Crypto Lending

Crypto News Regulation

Bithumb and Upbit Face Heat Over High-Stakes Crypto Lending

Written by Aaron S.,

Editor-In-Chief

Last Updated: July 31, 2025

Key Takeaways

Upbit and Bithumb’s new lending tools sparked legal and safety concerns from South Korean regulators;
Upbit paused its Tether loan product, while Bithumb made changes but kept its up to four-times leverage;
Authorities warned that crypto-backed lending may soon face stricter rules and licensing.

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Bithumb and Upbit Face Heat Over High-Stakes Crypto Lending

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South Korean regulators have stepped in after Bithumb $587.15M and Upbit $1.15B introduced new loan and trading features that raised legal and investor safety concerns.

According to a July 30 report by Korea JoongAng Daily, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) called a meeting with the country’s five largest exchanges on July 25 to discuss the issue.

On July 4, Bithumb introduced a feature that offers users the option to borrow up to four times the value of their crypto assets. The service supported 10 digital assets, including Bitcoin BTC $90,420.80 , Ethereum ETH $3,088.75 , and USDT USDT $1.00 .

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Upbit launched a similar feature, though it only applied to XRP XRP $2.01 , Bitcoin, and USDT.

However, this kind of setup has raised red flags for financial authorities, as it resembles risky practices usually restricted in traditional finance.

After the meeting with regulators, Upbit decided to suspend its Tether lending option. The exchange said it would review the service to ensure it complies with Korean law, which treats some lending products as regulated financial activities.

Bithumb later adjusted its system but kept its four-times borrowing limit.

Officials are especially concerned that these products allow for short-selling and high-risk trades without clear protections for users.

They also noted that without clear legal guidelines, lending backed by digital assets could fall under existing rules for loan services, which would require licenses and stricter oversight.

Meanwhile, the Bank of Korea (BOK) recently introduced a new Virtual Asset Team. What is the group's role? Read the full story.