South Korean Regulatory Authority Advocates Prohibition of Cryptocurrency Purchases Using Credit Cards

South Korea's Financial Services Commission (FSC) is taking a proactive stance in addressing concerns related to the unauthorized outflow of domestic funds to overseas virtual asset exchanges via card payments. To counter these concerns, the FSC has proposed a ban on using credit cards for the acquisition of cryptocurrencies.

Emphasizing the potential risks associated with the unlawful movement of domestic funds, the FSC aims to expand the list of prohibited credit card transactions to encompass dealings with cryptocurrency exchanges. This step is designed to restrict the outflow of foreign currency and diminish the threats of money laundering. The regulatory body articulated its objectives in a statement disseminated on Thursday.

As part of the proposed alterations in regulations, the FSC has invited comments from both organizations and individuals, encouraging diverse perspectives and insights from stakeholders in the financial domain until February 13th. This inclusive approach underscores the FSC's commitment to gathering comprehensive input before making any conclusive decisions.

This recent initiative follows the FSC's prior proposal, which primarily concentrated on fortifying security and user protection measures within the cryptocurrency exchange sphere. In the earlier proposal, the commission advocated for exchanges to store a minimum of 80% of their clients' deposits in cold wallets. Cold wallets, serving as offline crypto storage solutions, are deemed less vulnerable to hacking attempts compared to their online counterparts.

In addition to the requirement for cold wallets, the FSC's earlier proposal mandated exchanges to compensate customers for the use of their deposits by implementing fees. These fee structures are crafted to ensure a fair and transparent relationship between exchanges and their user base, reinforcing the overall protection and integrity of the cryptocurrency market in South Korea.

The dual strategy adopted by the FSC, which involves protecting user interests and preventing illicit financial activities, underscores a dedication to establishing a secure and well-regulated environment for cryptocurrency transactions within the country. As the regulatory landscape undergoes continual evolution, it is evident that South Korea is actively adjusting its policies to effectively address emerging challenges and seize opportunities in the dynamic field of digital assets.

Read More: South Korea's Financial Watchdog Unveils Comprehensive Safeguards for Crypto Consumers