The South Korean Financial Services Commission (FSC) today (Thursday) published a legislative notice proposing a ban on cryptocurrency purchases using credit cards. If approved, the prohibitory rule will be imposed on the local citizens.
No Crypto on Credit
The highest financial regulator in South Korea proposed the restriction as it is concerned about the illegal outflows of domestic funds out of the country.
“Concerns have been raised about the illegal outflow of domestic funds overseas due to card payments on overseas virtual asset exchanges, money laundering, speculation, and encouragement of speculative activities,” the notice stated. “Accordingly, virtual assets [...] are stipulated as prohibited for payment.”
“In the future, it is expected that a basis for cooperation with international brands will be established and prevention of foreign currency outflow and money laundering will be strengthened.”
The FSC's proposal is now seeking feedback from the public and will be open until 13 February. It has to go through a review and resolution process, and if everything is in place, it will be effective in the first half of the year.
High Crypto Adoption Rate
South Korea is one of the lucrative markets when it comes to cryptocurrencies. The country has a high crypto adoption rate. According to a KuCoin survey, 26 percent of South Korean adults are holding cryptocurrencies.
The country already mandated the identification verification of all users for deposits and withdrawals from local cryptocurrency exchanges. However, these rules do not apply to overseas crypto exchanges targeting the local South Korean population.
South Korea is not the first to explore the restrictions of purchasing cryptocurrencies using credit cards. Earlier, Taiwan already banned the use of credit cards for crypto purchases and even asked banks and credit card companies not to partner with cryptocurrency service providers as merchants.
Meanwhile, several banks occasionally barred their customers holding credit cards from purchasing cryptocurrencies, mainly citing the volatility and risks associated with the asset class.
This article was written by Arnab Shome at www.financemagnates.com.
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