South Korea’s Financial Services Commission (FSC) proposed changing its credit finance act, banning local citizens from buying crypto using credit cards.
South Korea’s financial watchdog has proposed banning citizens from purchasing cryptocurrencies using credit cards. The FSC said it wants to limit crypto users from trading on foreign crypto exchanges.
Concerns Over Illegal Outflow of Domestic Funds
In a legislative notice, the FSC explained it seeks a partial amendment to its “Enforcement Decree of the Credit-Specialized Financial Business Act” to limit local crypto traders from buying cryptocurrencies on foreign exchanges. By effectively banning crypto purchasing with credit cards, the FSC hopes to address numerous concerns it identified:
“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,” said the FSC.
Adding that “…virtual assets are stipulated as prohibited for payment.”
Different Rules for Domestic and Foreign Exchanges
Under existing law, South Korea applies stricter regulation on local crypto exchanges. According to local South Korean news outlet Yonhap, domestic crypto exchanges only allow transaction of virtual assets through deposit and withdrawal accounts if the user’s identity can be authenticated. Similar rules, however, do not apply to foreign crypto exchanges. Local trading platforms must also undergo strenuous licensing preparations to provide fiat-to-crypto service and must secure partnerships with local banks.
According to Yonhap’s report, the FSC plans to collect public feedback on the proposed amendment until February 13, 2024. The proposal is expected to be reviewed and voted on to implement the changes in the first half of 2024.
Improved Crypto Regulation and Increased Transparency
South Korea recently introduced several new rules that virtual-asset companies must adhere to. In a bid to improve transparency and accounting clarity, the FSC issued draft rules mandating companies holding or issuing cryptocurrencies to disclose their holdings in financial statements from 2024. According to the draft rules, local crypto firms would have to disclose information about the characteristics of their holdings, quantities owned, business models followed, and internal accounting policies.
The country’s Ministry of Personnel Management recently announced South Korea’s high-ranking public official must disclose their crypto holdings starting this year. According to the Ministry, public officials must declare their holdings to the “Public Ethics and Transparency Initiative,” explaining it aims to improve transparency in public service.
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.
