South Korea's FSS to Restrict High-Interest Small Loans to Active-Duty Soldiers Within the Year, Citing Crypto and Online Gambling Over-Indebtedness Risks

November 15: According to Yonhap News Agency, South Korea's Financial Supervisory Service (FSS) announced today that it will work with the Financial Services Commission and the banking sector to advance a series of new financial consumer protection rules, including completing the drafting of standard business guidelines before the end of the year to fully restrict small-loan (daebu) institutions from issuing general credit loans to active-duty soldiers.

Data shows that loans to active-duty soldiers from the top 30 lending institutions registered with South Korea's Financial Services Commission have surged from 350 million KRW at the end of 2022 to 24.2 billion KRW (about $17 million) at the end of 2025. South Korean regulators noted that some active-duty soldiers have blindly poured borrowed funds into high-risk investments such as virtual assets (cryptocurrencies) and online gambling, which is one of the main causes of over-indebtedness.

In addition, the FSS will simultaneously push to expand flexible bank branch operations and shorten the notification cycle for long-unused prepaid electronic payment accounts from one year to three months.