The South Korean Financial Services Commission (FSC) is currently deliberating on a proposed amendment to its credit finance act, with the specific intention of restricting the use of credit cards for the acquisition of cryptocurrencies. The FSC’s decision, outlined in a post on January 3, is primarily motivated by the desire to address concerns related to the illicit outflow of domestic funds and speculative activities associated with the purchase of cryptocurrencies on foreign exchanges.
This proposed amendment reflects a broader initiative by the FSC to intensify regulatory measures within the local cryptocurrency market, which has come under heightened scrutiny. The surge in cryptocurrency activities is particularly evident with two prominent Korean exchanges, Upbit and Bithumb, contributing to over 10% of the global trading volumes.
While domestic cryptocurrency exchanges in South Korea are subject to stringent rules, including transaction authentication and partnerships with local banks, their foreign counterparts currently operate with a comparatively lower level of regulation. The proposed amendment is part of a comprehensive strategy to standardize the treatment of virtual assets, bringing them in line with other prohibited payment methods.
The proposal is open for public feedback until February 13, 2024, emphasizing a commitment to transparency and democratic participation in shaping regulatory frameworks. If the amendment passes, South Korean citizens would be restricted from utilizing credit cards for the purchase of cryptocurrencies on foreign platforms, thereby limiting their access to virtual assets through these channels.
This regulatory development coincides with recent findings from introduced tax regulations, revealing that South Koreans held over $98 billion worth of cryptocurrency holdings in overseas accounts in September 2023. This potential amendment reflects the global trend among regulatory bodies, as they seek to establish a more controlled and secure environment for the evolving cryptocurrency landscape.
The final decision on the proposed amendment is anticipated to be reviewed and potentially implemented within the first half of 2024, marking a critical phase in South Korea’s regulatory stance on cryptocurrency transactions.
Raksha, a seasoned journalist, specializes in crafting insightful narratives on blockchain and AI developments. With a keen eye for innovation, she distills complex topics into accessible stories, providing readers with a clear understanding of the dynamic intersection between these transformative technologies.
