Amidst a national surge in crypto trading, South Korea’s FSC is proposing a significant change to their credit finance laws, potentially barring citizens from the use of credit cards in cryptocurrency transactions.
South Korea Aims to Tighten Crypto Regulations with Proposed Credit Card Ban
The South Korean Financial Services Commission (FSC) is considering an amendment to its credit finance act that would ban the use of credit cards to purchase cryptocurrencies. The Jan. 3 post on the FSC website states that this move is aimed at curbing the illegal outflow of domestic funds and speculative activities associated with buying crypto on foreign exchanges. The proposed change seeks to align the treatment of virtual assets with other prohibited payment methods, addressing concerns about money laundering and the encouragement of speculative behavior.
The FSC’s initiative comes as part of a broader effort to tighten regulations on the local cryptocurrency market, which has been under increased scrutiny. At the same time, South Korea is experiencing a surge in crypto, with two Korean exchanges Upbit and Bithumb contributing over 10% to the global trading volumes. While domestic exchanges in South Korea are subjected to strict rules requiring transaction authentication and partnerships with local banks, foreign exchanges do not face the same level of regulation. The proposal, open for public feedback until February 13, 2024, aims to reduce risks and enhance the transparency and security of crypto transactions.
If passed, the amendment would prevent South Korean citizens from using credit cards to buy cryptocurrencies, effectively limiting their access to virtual assets via foreign platforms. It is possible this is connected with findings from recently introduced tax regulation that, in September 2023, revealed South Koreans held over $98 billion worth of crypto holdings in overseas accounts for the year.
This proposal is indicative of the growing global trend of regulatory bodies seeking to establish a more controlled and secure cryptocurrency environment, reflecting the heightened attention crypto continues to accrue. The decision is expected to be reviewed and potentially implemented in the first half of 2024.