South Korea Proposes Credit Card Ban for Crypto Purchases Amid Growing Concerns

  • South Korea’s FSC proposes banning credit card use for foreign cryptocurrency purchases, citing concerns about illegal fund outflows, money laundering, and speculation.
  • Increased regulatory focus follows an investigation revealing significant crypto trading activities among South Korean lawmakers, highlighting challenges in enforcing transparency and reporting standards in the cryptocurrency space.

In a move signaling heightened regulatory scrutiny, South Korea’s Financial Services Commission (FSC) has put forth a proposal to amend the Enforcement Decree of the Credit-Specialized Financial Business Act. The proposed amendment aims to prohibit the use of credit cards for purchasing cryptocurrencies, specifically targeting transactions on foreign exchanges.

The motivation behind this proposed change, as outlined by the FSC, is multifaceted. The commission expresses concerns over potential illegal outflows of domestic funds, the risk of money laundering, and the fostering of speculative behavior within the cryptocurrency trading landscape.

The FSC’s Content section of the proposal addresses the apprehensions, stating, “Concerns have been raised about illegal outflow of domestic funds overseas due to card payments on overseas virtual asset exchanges, money laundering, speculation, and encouragement of speculative activities.”

Additionally, the FSC envisions the amendment as a means to establish a foundation for cooperation with international brands. This collaborative effort is expected to strengthen measures against foreign currency outflow and money laundering.

The proposal allows for public feedback until February 13, providing individuals and organizations with an opportunity to contribute their insights. Following this period, the amendment will undergo review and voting, with the intention of implementing the new rules in the first half of 2024.

The regulatory spotlight on cryptocurrency transactions in South Korea has intensified with recent revelations from an Anti-Corruption and Civil Rights Commission investigation. The probe uncovered substantial cryptocurrency trading activities among the country’s lawmakers over the past three years.

During the specified period from May 30, 2020, to May 31, 2023, 18 lawmakers were identified as virtual asset owners, with 11 actively engaging in trading. The cumulative trading volume for these lawmakers amounted to 62.5 billion won ($48.4 million) for purchases and 63.1 billion won ($48.8 million) for sales. Bitcoin emerged as the most traded cryptocurrency, with a diverse portfolio encompassing 107 different types.

A notable finding from the investigation identified one lawmaker who conducted 49 crypto transactions without reporting them, citing a closed exchange account as justification. This underscores the challenges of enforcing transparency and reporting standards in the cryptocurrency space.

As South Korea navigates these regulatory discussions and probes into crypto activities, the proposed credit card ban adds another layer to the evolving landscape of cryptocurrency regulations in the country.

Navigating Regulatory Waves – South Korea’s Crypto Credit Card Ban Proposal

South Korea’s Financial Services Commission (FSC) is steering regulatory efforts to curb potential risks associated with cryptocurrency transactions. The proposed ban on using credit cards for crypto purchases, aimed at foreign exchanges, reflects concerns over illegal fund outflows, money laundering, and speculative activities. 

As the FSC seeks public input until February 13, the move aligns with a broader crackdown on crypto, evidenced by recent revelations of substantial trading activities among lawmakers. This proposed measure adds a new chapter to South Korea’s evolving cryptocurrency regulatory landscape.

Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.

Author: Mehar Nayar

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