A troubling trend has emerged in South Korea, where younger crypto investors have dived headfirst into a swirl of loan defaults, especially via online banking.
A troubling trend has emerged in South Korea, where younger crypto investors have dived headfirst into a swirl of loan defaults, especially via online banking. Statistics recently released by the Financial Supervisory Service reveal an astonishing 484% surge in defaulted loans among borrowers under 30 since last December, with total outstanding debts reaching approximately $288 million.
K Bank, better known through its partnership with popular cryptocurrency exchange Upbit, has a class-leading rate of defaulters, coming in at 4.05% of people under 30 failing to pay back their loans. That far outpaces other neobanks such as Kakao Bank and Toss Bank, at 2.1% and 1.75%, respectively.
The shocking statistics were revealed after a freedom of information request by National Assembly member Kim Hyun-jung, who is also a member of the Political Affairs Committee. These findings have resulted in calls for tighter loan screening, especially regarding digital banks that deal with cryptocurrency traders.
Many experts say crypto-linked bank accounts could be associated with loan defaults, citing the possibility that young investors may have borrowed money to make some investments in cryptocurrencies and then lost repayment capabilities after markets turned unfavorable. The case is more remarkable for K Bank, which has added a large number of young account holders thanks to an affiliation with Upbit.
This trend continues with other digital banking platforms; for example, Kakao Bank partnered with the crypto exchange Coinone in August 2022. In contrast, Toss Bank does not currently maintain partnerships with domestic cryptocurrency exchanges and has the lowest rate of default among major neobanks.
This development comes at a crucial time for K Bank, as it prepares for an initial public offering scheduled for the end of this month.
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