South Korea’s Financial Services Commission (FSC) has put forward an amendment to the credit finance act, aiming to bar locals from using credit cards for buying cryptocurrencies. The primary goal behind this proposal is to curb South Korean crypto traders’ ability to purchase crypto through foreign exchanges, a move driven by concerns regarding illicit capital flow, potential money laundering, and the fostering of speculative behavior.
The FSC intends to gather public input on this amendment until February 13, with plans for review and potential implementation by the first half of 2024. This proposed change aligns with the existing regulations requiring South Korean crypto users to trade via verified local exchange accounts using their real identities, established under a 2021 financial reporting law update. Additionally, local trading platforms must undergo stringent licensing procedures to offer fiat-to-crypto services, including partnering with local banks.
This ban on credit card crypto purchases represents part of the FSC’s broader efforts to oversee the crypto sphere and safeguard investors. Notably, recent proposals by the FSC in December 2023 aimed to protect users of crypto exchanges by mandating that exchanges store a minimum of 80% of customer deposits in cold wallets and compensate customers for using their deposits through fees.
