South Korea Proposes Ban on Purchasing Cryptocurrency with Credit Cards
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Modified on: Thu, 4 Jan, 2024 at 12:36 AM
South Korea's Financial Services Commission (FSC), the top financial regulator in the country, has proposed changes to credit finance laws to prohibit local citizens from using credit cards to purchase cryptocurrency. The proposal aims to address concerns about potential illegal outflows, money laundering risks, and speculative activities associated with South Korean citizens acquiring cryptocurrencies from overseas exchanges using credit cards.
Key Points:
Regulatory Concerns: The FSC has expressed concerns about the possibility of illegal outflows of domestic funds, money laundering, and the encouragement of speculative activities arising from South Korean citizens using credit cards to buy cryptocurrencies from foreign exchanges.
Prohibition of Virtual Asset Payments: The proposed changes aim to classify virtual assets as prohibited for payment through credit cards. Currently, local cryptocurrency exchanges follow regulations that require transactions between virtual assets to occur through verified deposit and withdrawal accounts. However, these rules do not apply to transactions on foreign crypto exchanges.
Identity Verification: Local exchanges enforce identity verification for transactions involving virtual assets, helping to prevent unauthorized or illicit activities. The proposed prohibition seeks to extend similar safeguards to transactions on foreign platforms, where identity verification may not be as rigorously enforced.
Public Input and Implementation Timeline: The FSC has initiated a public input phase for the proposed changes, allowing stakeholders and the public to provide feedback until Feb. 13. The regulatory proposal will undergo a review and resolution process, with the aim of implementation in the first half of the year.
Addressing Global Crypto Transactions: The proposed prohibition reflects South Korea's efforts to address potential risks associated with global cryptocurrency transactions. By restricting credit card usage for overseas crypto purchases, the regulator seeks to enhance oversight and mitigate the risks of illegal activities.
Conclusion: South Korea's Financial Services Commission has proposed changes to credit finance laws to prohibit citizens from using credit cards for cryptocurrency purchases from overseas exchanges. The move is driven by concerns about potential illegal outflows, money laundering, and speculative activities. The proposed changes, currently open for public input, underscore the regulator's commitment to addressing risks associated with cryptocurrency transactions and promoting responsible use of financial instruments in the digital asset space.
(BRAYDEN LINDREA, COINTELEGRAPH, 2023)
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