Goal Is To Outlaw Using Credit Cards To Purchase Cryptocurrency

In a bid to curb capital flight, money laundering, and potentially risky speculation, the Financial Services Commission of South Korea has proposed an amendment restricting the use of domestic crypto credit cards for purchasing cryptocurrency on foreign exchanges.

This move by the country’s top financial regulator targets a loophole that has allowed Korean citizens to circumvent existing regulations limiting cryptocurrency purchases using traditional credit cards.

The proposed amendment, if implemented, would further tighten South Korea’s grip on the burgeoning crypto market, raising questions about its potential impact on individual financial freedom and the broader adoption of digital assets within the country.

 

1. Regulatory Proposal:

  • The Financial Services Commission of South Korea proposes an amendment to restrict the use of domestic crypto credit cards for buying cryptocurrency on foreign exchanges.
  • The goal is to curb capital flight, money laundering, and risky speculation, addressing a loophole allowing citizens to bypass existing regulations.

2. Impact on Crypto Market:

  • The proposed amendment raises concerns about its potential impact on individual financial freedom and the broader adoption of digital assets within South Korea.
  • The move is seen as an attempt to tighten the country’s control on the growing crypto market.

3. Safety Nets and Threats:

  • The Financial Services Commission emphasizes the need to enforce restrictions on cryptocurrency dealers’ overseas exchange activities to protect domestic funds and the financial system.
  • The amendment aims to diversify financing sources for credit organizations, with expected enactment in the first half of the year.

4. Existing Regulatory Measures:

  • A 2021 amendment mandates cryptocurrency transactions through withdrawal and deposit accounts on domestic exchanges, authenticated using actual names.
  • Local trading platforms offering fiat-to-crypto services must undergo stringent regulatory requirements, including alliances with local banks.

5. International Cooperation:

  • The proposed amendment aligns with South Korea’s efforts to reduce hazards related to virtual assets, emphasizing cooperation with global payment giants like Mastercard and Visa.

6. Legislative Crypto Trading Activity:

  • The Anti-Corruption and Civil Rights Commission discovered significant crypto trading among South Korea’s legislators, totaling about 125 billion won ($97 million) over three years.

7. Decentralized Wallet Initiative:

  • The National Tax Service clarifies that users holding virtual assets in decentralized, non-custodial wallets will not be required to register foreign bank accounts.
  • This initiative aims to provide users with decentralized wallets a more open and accountable environment.

8. Crypto Adoption in South Korea:

  • Approximately 2 million individuals, or 3.9% of the total population, own cryptocurrencies in South Korea.
  • The country, home to major cryptocurrency exchanges, has witnessed surges in crypto popularity, with around 30% of global crypto trading occurring in the Korean market.

Note: The blog post discusses South Korea’s regulatory efforts, potential impacts on the crypto market, legislative crypto trading, and initiatives to foster responsible crypto use.

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