South Korea’s Financial Services Commission (FSC) is moving to amend credit finance laws to prevent the use of credit cards for cryptocurrency purchases. This legislative change, announced on January 3, aims to address concerns about potential illegal fund outflows and money laundering risks associated with South Koreans buying cryptocurrencies from overseas exchanges.

Prohibiting Crypto Purchases with Credit Cards

The FSC’s proposal highlights worries over the potential for domestic funds to be illegally transferred overseas, along with the risks of money laundering and speculative activities linked to cryptocurrency transactions. The proposed changes will classify virtual assets as unsuitable for credit card payments, thus aiming to curb these risks.

Current Regulations and Overseas Exchanges

Presently, South Korean laws mandate that local cryptocurrency exchanges permit transactions involving virtual assets only through deposit and withdrawal accounts that can verify the user’s identity. However, this regulatory framework does not extend to foreign cryptocurrency exchanges, which has become a point of concern for the FSC.

Seeking Public Feedback

The FSC is actively seeking public feedback on this proposal until February 13. Following the feedback period, the proposal will undergo a review and resolution process. The aim is to have these changes implemented in the first half of 2024.

This move represents a significant step by South Korean authorities to regulate the cryptocurrency market and safeguard against financial risks and illegal activities. It reflects the growing need for regulatory frameworks to evolve in tandem with the rapidly expanding digital asset landscape.

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