South Korea considers ban on cryptocurrency purchases with credit cards

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The Korean government is proposing to revise credit finance regulations to make it illegal for residents to purchase cryptocurrency with credit cards.

Foreign cryptocurrency exchanges are exempt from legal restrictions that apply to domestic cryptocurrency exchanges.

The head of the Korea Financial Supervisory Service is proposing to revise credit finance regulations to make it illegal for residents to purchase cryptocurrency using credit cards.

The country’s Financial Services Commission (FSC) raised concerns about potential money laundering and illicit outflows related to South Korean citizens purchasing cryptocurrencies on external exchanges through a legislative notice on January 3.

According to the regulator, the main purpose of this amendment is to restrict domestic cryptocurrency traders from purchasing cryptocurrencies on international exchanges. As declared by FSC:

“Concerns are being raised about illegal outflow of domestic funds overseas due to card payments on overseas virtual asset exchanges, money laundering, speculation, and promotion of speculative activities.”

According to the Korea Media Association, overseas cryptocurrency exchanges are currently exempt from legal regulations that apply to domestic cryptocurrency exchanges. These laws only allow virtual asset transactions through deposit and withdrawal accounts where the user’s identity can be verified.

The Financial Supervisory Service is currently accepting public comments on this proposal and will accept them until February 13th. The goal is to implement it in the first half of 2024 after a review and resolution process.

Cryptocurrency users in Korea must trade using deposit and withdrawal accounts from local exchanges verified by their real names in accordance with the revised Financial Reporting Act of 2021. To offer fiat-to-cryptocurrency services, local trading platforms must go through strict licensing requirements, including partnerships with local banks.

Over the past three years, South Korean lawmakers have bought and sold approximately $100 million worth of cryptocurrency. This data comes from a report released by the Anti-Corruption and Civil Rights Commission on December 29. It is expected that 125.6 billion won worth of cryptocurrency will be traded in the National Assembly member’s account.

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