South Korea’s financial landscape is set to undergo a significant shift as the country’s top financial regulator, the Financial Services Commission (FSC), proposes amendments to credit finance laws, specifically targeting the use of credit cards for cryptocurrency purchases by local citizens. In a legislative notice issued on January 3, the FSC expressed concerns regarding potential illegal outflows and money laundering associated with South Korean citizens acquiring cryptocurrencies from foreign exchanges.
The FSC highlighted the raised apprehensions about the illegal movement of domestic funds overseas through card payments on international virtual asset exchanges. The concerns encompassed not only potential money laundering but also speculative activities that might be encouraged by such transactions. To address these issues, the FSC outlined the prohibition of using credit cards for purchasing virtual assets, stating, “virtual assets […] are stipulated as prohibited for payment.”
Under the existing laws, local cryptocurrency exchanges in South Korea facilitate transactions between virtual assets through deposit and withdrawal accounts, where the user’s identity can be verified. However, these regulations do not extend to foreign cryptocurrency exchanges, creating a potential regulatory gap.
In response to this, the FSC is soliciting public input on the proposed changes, providing an opportunity for stakeholders to voice their opinions on the matter. The public consultation period is set to continue until February 13. Following this, the proposal is expected to undergo a comprehensive review and resolution process, with the ambitious goal of implementation in the first half of 2024.
This move reflects South Korea’s commitment to ensuring the integrity and legality of cryptocurrency transactions within its borders. By addressing potential loopholes in the regulatory framework, the FSC aims to enhance oversight and mitigate risks associated with the use of credit cards for cryptocurrency purchases, aligning the nation with evolving global standards in financial regulation.
