South Korea's Crypto Industry Faces Debt Crisis as 200% Rule Takes Effect

The South Korean cryptocurrency industry is bracing for a debt crisis as a new regulation takes effect on August 20, requiring virtual asset service providers to maintain a debt ratio of 200% or less.

An analysis of financial statements filed with the electronic disclosure system DART and the Small and Medium Business Status Information System shows that 12 out of 24 operators had debt ratios exceeding 200% at the end of last year. When including four additional operators whose financial statements were not disclosed but were previously in full capital impairment, up to 16 operators, or roughly two-thirds of the market, are estimated to fall short of the threshold.

The regulation aims to strengthen the financial stability of crypto-related businesses operating in the country and comes amid a broader global trend of tightening oversight on virtual asset service providers. South Korea has been particularly aggressive in implementing safeguards to protect consumers and ensure market integrity.