South Korea Plans to Restrict Cryptocurrency Purchases with Credit Cards

The Financial Services Commission (FSC) of South Korea is debating amending the nation’s credit financing rules. The idea seeks to outlaw the use of credit cards by locals to buy cryptocurrencies. The action is being taken in response to concerns raised by the FSC over possible illicit outflows and money laundering related to South Korean nationals purchasing cryptocurrency via outside exchanges.

The Federal Reserve expressed worries about the ramifications of permitting residents to use credit cards for bitcoin transactions in a legislative notification published on January 3. The regulator brought up the possibility of illicit domestic cash outflows abroad, including money laundering, speculative activity, and the promotion of such activity.

The proposed amendment explicitly states that “virtual assets are stipulated as prohibited for payment” through credit cards. While current laws require local cryptocurrency exchanges to conduct transactions only between virtual assets through verified deposit and withdrawal accounts, these rules do not extend to transactions with foreign crypto exchanges, creating a regulatory gap.

Seeking Public Input

In order to provide a clear and well-balanced regulatory framework, the financial services regulator is requesting public feedback on the suggested modifications. Stakeholders and the general public will have until February 13 to provide their input on the possible effects of the proposed revision.

Before being put into effect, the suggested adjustments should go through a rigorous evaluation and resolution procedure. In the first half of 2024, the FSC intends to put these changes into effect. This step demonstrates South Korea’s will to manage any dangers related to bitcoin transactions and to keep regulatory oversight over the developing digital asset sector.