South Korean Crypto Credit Card Ban Will Be Launched To Limit Money Laundering

Key Points:

• The Financial Services Commission proposes an amendment to ban South Korean crypto credit card transactions for cryptocurrency purchases on foreign exchanges.
• The move is driven by concerns about illegal fund outflows, money laundering, and speculative activities in the crypto market.

The Financial Services Commission (FSC), the nation’s top financial regulatory body, has unveiled a proposed amendment to the Credit Finance Act, targeting a restriction on local citizens using South Korean crypto credit cards to buy cryptocurrencies on foreign exchanges.

FSC Proposes Ban on South Korean Crypto Credit Card Purchases

The move comes as the FSC aims to address concerns related to illegal fund outflows, money laundering, and the promotion of speculative behavior within the crypto market.

Highlighting the urgency of the situation, the FSC emphasized the need to curb crypto traders’ activities on foreign exchanges, citing potential risks to domestic funds and the financial system. The amendment, set to be enacted in the first half of the year pending a review and resolution process, seeks to diversify the financing methods of credit-specialized financial companies.

Domestic cryptocurrency exchanges, governed by the Act on Reporting and Use of Specific Financial Transaction Information, will adhere to strict regulations, allowing transactions solely through verified deposit and withdrawal accounts. The concern lies in the exemption of overseas virtual asset exchanges, potentially leading to the illicit outflow of domestic funds via card payments.

In a bid to strengthen these regulatory measures, the proposed amendment plans to extend the ban on South Korean crypto credit cards, fostering collaboration with international payment giants like Visa and Mastercard. This move aligns with South Korea‘s ongoing efforts to mitigate risks associated with virtual assets.

Earlier clarity was provided by the National Tax Service, stating that individuals holding virtual assets in non-custodial, decentralized wallets, including cold wallets, will not be subject to overseas financial account reporting. This development aims to create a more transparent and accountable environment for decentralized crypto wallet holders in the country.