South Korea Crypto Firms Face Debt Crisis as 200% Rule Takes Effect

South Korea's crypto industry is bracing for a debt crisis as a new regulation takes effect on August 20. The revised enforcement decree of the Special Financial Transactions Act caps debt ratios at 200%, requiring virtual asset service providers (VASPs) to maintain a debt-to-equity ratio of 200% or less.

An analysis of financial statements revealed that 12 out of 24 operators with verifiable data had debt ratios exceeding 200%. When including four additional operators whose financial statements were not disclosed, up to 16 operators, roughly two-thirds of the market, are estimated to fall short of the threshold.

The one-year preparation period before full enforcement is intended to give firms time to adjust their finances. However, it remains unclear what actions will be taken against non-compliant operators after the grace period, including whether they would face immediate shutdown.