The Financial Services Commission (FSC) of South Korea, the nation’s top financial regulator, has proposed to amend the Credit Finance Act, prohibiting its citizens from utilizing credit cards to purchase cryptocurrencies.
This move comes as a response to concerns regarding the illegal flow of domestic funds, money laundering, and the promotion of speculative behavior through cryptocurrency trading on foreign exchanges.
Concerns over illegal fund flow and speculative behavior
The FSC’s primary motive behind the proposed amendment is to curb South Korean cryptocurrency traders’ ability to purchase digital assets on foreign cryptocurrency exchanges. The regulatory body expressed apprehensions about the unlawful transfer of domestic capital, potentially contributing to money laundering and fostering speculative trading habits among local investors.
The proposed amendment has been published in a legislative notice, and the FSC has opened the floor for public feedback. Stakeholders and the general public will have until February 13 to provide input and suggestions.
Subsequently, the amendment is expected to undergo review and a voting process with the objective of implementation during the first half of 2024, as reported by Yonhap News Agency.
South Korea has been actively regulating its cryptocurrency market to enhance transparency and security. In 2021, the financial reporting law amendment mandated that South Korean cryptocurrency users trade using withdrawal and deposit accounts on local exchanges verified with their real names.
Additionally, local trading platforms were required to undertake rigorous licensing preparations, including establishing partnerships with local banks to offer fiat-to-crypto services.
If the proposed amendment is ratified, it will significantly change how South Korean cryptocurrency enthusiasts can access digital assets. The restriction on using credit cards for cryptocurrency purchases could pose challenges for those who rely on this method for convenience and liquidity.
This amendment encourages greater adherence to domestic regulations and reduces the likelihood of illicit financial activities.
Crypto community response
The South Korean cryptocurrency community closely monitors the developments surrounding this proposed amendment. Many traders and investors are concerned about the potential limitations it may impose on their access to global cryptocurrency markets.
However, there is also recognition within the community of the importance of regulatory measures in curbing illegal activities and ensuring a safe and transparent crypto environment.
The proposed amendment has sparked discussions within the cryptocurrency industry about the impact of such regulatory changes on the South Korean market. Industry stakeholders are keen to engage in the public feedback process and contribute to shaping the final legislation. They emphasize the need for balanced regulations that encourage innovation while addressing concerns related to illicit activities.
The South Korean government’s efforts to regulate cryptocurrency trading also have international implications. The restriction on credit card usage for cryptocurrency purchases is aimed at limiting South Koreans’ access to foreign cryptocurrency exchanges. This move aligns with global efforts to combat money laundering and illegal fund flows across borders.
