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South Korea Proposes Ban on Credit Card Purchases of Cryptocurrency to Combat Money Laundering

South Korea’s top financial regulator is taking steps to amend the country’s credit finance laws with the intention of prohibiting local residents from using credit cards to purchase cryptocurrencies.

This move comes as the Financial Services Commission (FSC) of South Korea expresses concerns regarding the potential risks associated with South Korean citizens acquiring cryptocurrencies from foreign exchanges.

In a legislative notice issued on January 3rd, the FSC highlighted its apprehensions regarding illegal fund outflows and money laundering, which could potentially be facilitated by individuals buying cryptocurrencies from foreign platforms using credit cards.

The FSC stated, “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.”

Consequently, the FSC is proposing to classify virtual assets as prohibited for payment through credit cards.

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Currently, local cryptocurrency exchanges in South Korea strictly enforce regulations that allow transactions involving virtual assets only through deposit and withdrawal accounts, where users’ identities can be verified.

However, these stringent rules do not apply to foreign cryptocurrency exchanges, leaving room for potential misuse.

To gather input and feedback from the public regarding this proposed change, the financial services regulator has initiated a public consultation period, which is slated to run until February 13th.

After the consultation phase, the proposal is expected to undergo a thorough review and resolution process, with the ultimate goal of implementing the new regulations in the first half of 2024.

The FSC’s decision reflects South Korea’s ongoing efforts to regulate and monitor the cryptocurrency market within its borders to mitigate the risks of illicit activities such as money laundering and speculative trading.

By prohibiting credit card transactions for cryptocurrencies, the government aims to enhance financial security and ensure that virtual assets are used in a responsible and legal manner.

This move aligns with a broader global trend of governments and regulatory bodies tightening oversight of the cryptocurrency sector to safeguard their financial systems and curb potential criminal activities.

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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