South Korea’s top financial regulator, the Financial Services Commission (FSC), is proposing changes to the country’s credit finance laws to prohibit citizens from using credit cards to purchase cryptocurrency. In a legislative notice on January 3, the FSC expressed concerns about potential illegal outflows and money laundering associated with South Korean citizens buying cryptocurrency from foreign exchanges.
The FSC highlighted worries about the illegal outflow of domestic funds, money laundering risks, speculative activities, and the encouragement of speculative behavior. As a response, the FSC is proposing to categorize virtual assets as prohibited for payment through credit cards.
Under current laws, local cryptocurrency exchanges in South Korea only allow transactions between virtual assets through deposit and withdrawal accounts where the user’s identity can be verified. However, these rules do not apply to transactions on foreign crypto exchanges, creating potential regulatory gaps.
The FSC is now seeking public input on this proposal, and the consultation period will last until February 13. After the public input phase, the proposal is expected to undergo a review and resolution process, with the aim of implementation in the first half of 2024. The proposed changes are part of efforts to address regulatory concerns and risks associated with cryptocurrency transactions, particularly those involving credit cards and foreign exchanges.
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