South Korea Proposes Amendment to Restrict Crypto Credit Card Use
The Financial Services Commission (FSC) of South Korea is seeking to tighten regulations on the use of domestic crypto credit cards for purchasing cryptocurrency on foreign exchanges. This move aims to address a loophole that has allowed Korean citizens to bypass existing restrictions on crypto purchases using traditional credit cards. The proposed amendment raises concerns about its potential impact on individual financial freedom and the broader adoption of digital assets in the country.
Safety Nets Vs. Possible Threats To Financial System
The FSC has highlighted the need to enforce restrictions on cryptocurrency dealers’ overseas exchange activity due to potential threats to domestic funds and the financial system. The amendment is intended to diversify financing sources for credit-focused financial organizations. It is expected to be enacted in the first half of the year, subject to review and resolution procedures.
A 2021 amendment to the financial reporting law already mandates that South Korean cryptocurrency users conduct transactions through withdrawal and deposit accounts on domestic exchanges authenticated with their actual names. Local trading platforms also need to meet stringent regulatory requirements, including forming alliances with local banks.
The FSC expressed concerns about illegal outflows of domestic funds overseas, money laundering, and speculation. The proposed amendment aims to strengthen existing regulatory measures by extending the ban on South Korean cryptocurrency credit cards and promoting cooperation with global payment giants like Mastercard and Visa.
Crypto Adoption in South Korea
Approximately 2 million individuals, or 3.9% of South Korea’s total population, currently own cryptocurrencies. The country experienced its first surge in crypto popularity in 2017 and is home to major cryptocurrency exchanges such as Upbit, BitHumb, Korbit, and Gopax. While it is legal to own, trade, and purchase crypto assets in South Korea, the government has not yet recognized them as official currency.
Hot Take: South Korea Proposes Stricter Regulations on Crypto Credit Card Use
The Financial Services Commission of South Korea is aiming to close a loophole that allows Korean citizens to use domestic crypto credit cards to buy cryptocurrency on foreign exchanges. The proposed amendment seeks to tighten regulations and prevent capital flight, money laundering, and risky speculation. However, this move raises concerns about individual financial freedom and the wider adoption of digital assets in the country. The amendment would reinforce existing restrictions on cryptocurrency credit cards and promote collaboration with global payment giants like Mastercard and Visa. It remains to be seen how these proposed measures will impact the thriving crypto market in South Korea.
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