🔥 Korean regulators act: mirror risks of on-chain leverage begin to converge

The Financial Services Commission of Korea announced today that it is raising the minimum margin requirement for leveraged chip ETFs and banning the listing of new single-stock leveraged products. Over the past week, the KOSPI plunged 6.4%, SK Hynix fell 11%, yet on-chain SK Hynix contract daily trading volume reached $8.8 billion—leverage bets have shifted from mirroring in traditional markets to mirroring on-chain.
Regulators are directly targeting leveraged single-stock ETFs, but on-chain perpetual futures and tokenized stocks are the real mirror battleground. After 320k retail investors in Korea were liquidated, the on-chain funding rate once dropped to -55%, making the cost of going long extremely high and market sentiment extremely bearish. When regulators move at this point, it cools traditional leverage and indirectly squeezes on-chain arbitrage space.
But the convergence of on-chain leverage does not mean risks have disappeared. Korea is considering using the FX fund to buy SK Hynix ADR, and Hwang In-hoon’s praise for its Nasdaq listing suggests the fundamental narrative has not collapsed. On-chain whales are still bargain hunting—yesterday, the number of SK Hynix long orders opened hit a new recent high. The tug-of-war between regulators and the market is forming a new structural balance.
For traders, on-chain leverage liquidation risk has not been fully eliminated—it has shifted from retail-focused concentrated liquidations to a game of whales’ unrealized losses. SK Hynix on-chain contracts still have a large number of positions in unrealized loss; once the price dips again, cascading liquidations may return. The convergence effect from regulation needs time to transmit, and short-term volatility will not disappear.
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