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South Korea's Financial Watchdog Proposes Crypto Credit Card Ban amid Concerns

South Korea's FSC is making waves in the financial arena with a bold proposal that aims to reshape the rules of the game
By Josefina Dipaolo
January 8, 2024

In a strategic move to safeguard against the potential risks of illegal fund outflows, money laundering, and speculative activities, South Korea's Financial Services Commission (FSC) has unveiled a proposal to amend its Enforcement Decree of the Credit-Specialized Financial Business Act. The key highlight of this proposal is a decisive step to prohibit crypto purchases using credit cards, with a particular focus on transactions on foreign exchanges. Let's delve into the details of this significant development that could reshape the landscape of cryptocurrency trading in the region.

The FSC has voiced concerns over the misuse of credit cards for purchasing cryptocurrencies on overseas virtual asset exchanges, emphasizing the need to curtail the illegal outflow of domestic funds. The proposed amendment is not only aimed at fortifying the regulatory framework within the country but also seeks to establish a cooperative foundation with international brands. This collaboration is envisioned to strengthen measures against foreign currency outflows and enhance anti-money laundering efforts.

A crucial aspect of the proposal is its openness to public feedback, providing individuals and organizations with an opportunity to share their perspectives until February 13. This inclusive approach aligns with the FSC's commitment to gather diverse insights before finalizing the regulatory changes. The subsequent phases involve a comprehensive review and voting on the proposed amendment, with a target timeline for implementation in the first half of 2024.

Adding a layer of complexity to the regulatory landscape, a recent investigation by the Anti-Corruption and Civil Rights Commission in South Korea has brought to light substantial cryptocurrency trading activities among the country's lawmakers. Over the past three years, these legislators collectively engaged in virtual asset transactions totaling approximately 125.6 billion won ($97.6 million).

The commission's 90-day inspection of transaction records identified 18 lawmakers involved in cryptocurrency ownership, with 11 actively participating in trading. Notably, Bitcoin emerged as the preferred cryptocurrency for these transactions, contributing to a diverse portfolio of 107 different types of virtual assets. Shockingly, one lawmaker was found to have conducted 49 crypto transactions without proper reporting, citing a closed exchange account.

As South Korea grapples with the intricacies of regulating the cryptocurrency space, the proposed amendment by the FSC marks a crucial step towards mitigating potential risks associated with credit card transactions in crypto. The public feedback period underscores the regulatory body's commitment to inclusivity and transparency. Meanwhile, revelations from the anti-corruption probe add a layer of urgency to the ongoing discussions, emphasizing the need for robust regulatory measures to govern cryptocurrency transactions among lawmakers. Crypto debit cards are poised to revolutionize the way we bank, promising to seamlessly integrate digital currencies into everyday transactions and marking them as the next big financial trend of the year. The unfolding narrative in South Korea underscores the evolving dynamics of crypto regulation and the imperative for vigilance in the face of emerging challenges.

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