June 24, 2024
South Korea Considers Prohibiting Credit Card Purchases of Cryptos
Policy & Regulation

South Korea Considers Prohibiting Credit Card Purchases of Cryptos

In a significant move aimed at fortifying regulatory oversight and mitigating concerns surrounding potential illicit financial activities, South Korea’s leading financial regulator, the Financial Services Commission (FSC), has unveiled a proposal to amend the country’s credit finance laws. The proposed changes seek to prohibit local citizens from using credit cards to purchase cryptocurrency. The legislative notice, released on January 3, emphasizes the FSC’s apprehensions regarding illegal capital outflows and money laundering risks associated with South Korean citizens acquiring cryptocurrency from foreign exchanges.

The FSC articulated its concerns in the legislative notice, asserting that “concerns have been raised about an illegal outflow of domestic funds overseas due to card payments on overseas virtual asset exchanges, money laundering, speculation, and encouragement of speculative activities.” In response to these concerns, the FSC is advocating for the categorization of virtual assets as prohibited for payment via credit cards.

Presently, under existing regulations, local cryptocurrency exchanges impose restrictions on transactions between virtual assets, permitting them only through deposit and withdrawal accounts where user identities can be verified. However, these regulations do not extend to transactions on foreign cryptocurrency exchanges, creating potential gaps in regulatory oversight, as noted by local news outlet Yonhap.

To address these regulatory disparities and enhance supervision over the cryptocurrency market, the FSC has initiated a public input process regarding the proposed credit card ban for cryptocurrency purchases. The consultation period is scheduled to extend until February 13, allowing stakeholders and the general public to contribute their insights and perspectives on the potential changes.

Following the conclusion of the public consultation period, the proposal is anticipated to undergo an extensive review and resolution process. If approved, the ban on credit card transactions for cryptocurrency purchases could be implemented in the first half of 2024.

This regulatory initiative underscores South Korea’s commitment to proactively managing the risks associated with the cryptocurrency market. By closing potential loopholes and aligning with international efforts to combat money laundering and illegal financial activities, the proposed changes represent a crucial step in the evolution of South Korea’s cryptocurrency regulatory framework. As the proposal advances through regulatory channels, industry stakeholders and the public will closely monitor developments, anticipating the impact on the local cryptocurrency landscape.

Image: Wallpapers.com

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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