Key takeaways:
- South Korea is proposing to amend the credit financing regulations, making it illegal for residents to use credit cards to buy cryptocurrencies.
- Foreign cryptocurrency exchanges are exempt from legal restrictions governing local cryptocurrency exchanges.
The head financial regulator in South Korea is proposing to amend the nation’s credit financing regulations, making it illegal for residents to use credit cards to buy cryptocurrencies.
The Financial Services Commission (FSC) of the nation raised worries about potential money laundering and illicit outflows associated with South Korean nationals purchasing crypto from outside exchanges in a legislative notification dated January 3.
As per the regulator, the primary objective of this latest modification is to restrict domestic cryptocurrency traders from purchasing cryptocurrency on international exchanges. As declared by the FSC:
“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,”
According to local outlet Yonhap, foreign cryptocurrency exchanges are exempt from the current legal restrictions governing local cryptocurrency exchanges. These laws only permit transactions involving virtual assets through deposit and withdrawal accounts where the user’s identity can be verified.
The financial services regulator is currently accepting public comments on the proposal and will be accepted through February 13. The goal is for it to be implemented in the first half of 2024 after going through a review and resolution procedure.
Users of cryptocurrency in South Korea must trade using withdrawal and deposit accounts on local exchanges, validated with their real names, as per a 2021 revision to the financial reporting law. In order to offer fiat-to-crypto services, local trading platforms must also go through stringent licensing requirements, which include allying with a local bank.
Over the previous three years, members of the South Korean parliament, the National Assembly, have bought and sold cryptocurrency valued at roughly $100 million. The data comes from a report published by the country’s Anti-Corruption and Civil Rights Commission on December 29. It is anticipated that 125.6 billion won (US$97.6 million) worth of cryptocurrencies will be transacted on lawmakers’ accounts.
