South Korea Proposes Credit Card Ban for Cryptocurrency Purchases in Regulatory Overhaul
In Brief
South Korea’s FSC proposed amendments to the credit finance act to prevent local citizens using credit cards to purchase cryptocurrencies.
Financial Services Commission (FSC) of South Korea put forth a proposal to amend its credit finance act, with the objective of preventing local citizens from using credit cards to purchase cryptocurrencies.
The proposed amendment by the FSC is designed to restrict cryptocurrency traders in South Korea from acquiring cryptocurrencies through foreign cryptocurrency exchanges. The legislative notice from the FSC highlighted concerns regarding the illegal outflow of domestic funds, money laundering and the promotion of speculative behavior as key factors influencing this decision.
The regulatory body intends to gather public feedback on the proposed amendment until Feb. 13, and is expected to undergo review and a voting process with the goal of implementation in the first half of 2024.
In accordance with a 2021 amendment to the financial reporting law, South Korean cryptocurrency users are mandated to conduct trades using withdrawal and deposit accounts on local exchanges, verified with their real names. Additionally, local trading platforms are required to undergo thorough licensing preparations to offer fiat-to-crypto services, which includes establishing partnerships with local banks.
South Korea Advances Cryptocurrency Oversight
South Korea has become a notable participant in the global cryptocurrency landscape, marked by a vibrant market and active public involvement. With the rising popularity of cryptocurrencies, South Korea authorities acknowledged the necessity for comprehensive regulations to manage potential risks and uphold the stability of its financial system.
Recently, the South Korean Financial Supervisory Service (FSS) revealed intentions to create a Virtual Asset Bureau dedicated to overseeing, inspecting, and examining virtual assets. The newly formed investigation team will possess the authority to investigate instances of “market manipulation” related to virtual assets.
The anticipated role of the Virtual Asset Bureau is to assist the Financial Services Commission (FSC) in formulating subsidiary laws under the ‘Virtual Asset User Protection Act,’ slated to commence from the start of 2024. Concurrently, the scrutiny of virtual asset operators is projected to occur in the latter half of the year.
In a recent development, South Korean video game developer Wemade faced a fine of $41 million imposed by South Korea’s National Tax Service (NTS) following a tax investigation into its cryptocurrency, WEMIX.
This action was initiated subsequent to the enactment of South Korea’s Virtual Asset Protection Act by the parliament. The new law is crafted to address illicit trading practices such as market price manipulation and insider trading.
South Korea takes decisive steps to regulate cryptocurrency transactions, as evident by the recent FSC decision, emphasizing concerns over financial stability, illicit activities, and the need for responsible trading practices.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
