South Korea plans to ban citizens from using credit cards to purchase cryptocurrencies.

According to a report by The Block, the Financial Services Commission (FSC) of South Korea has proposed an amendment to the Credit Finance Act, intending to ban South Korean citizens from using credit cards to purchase cryptocurrencies.

South Korea, a Major Crypto Trading Nation, Regulatory Authorities Plan to Establish Market Order Early

South Korea is a well-known major player in crypto trading. According to a report from September last year, the total amount of foreign financial assets registered by South Koreans was 186.4 trillion KRW, with an astonishing 130.8 trillion KRW, approximately 98 billion USD, in cryptocurrency assets, accounting for about 70%. This does not include assets below 500 million KRW, which do not require declaration.

Web 3 advisory firm DeSpread also reported in October last year that by the first half of 2023, the number of cryptocurrency investors in South Korea is expected to reach about 6 million, representing over 10% of the country's total population. The majority of these investors are predominantly active on centralized exchanges.

To cope with the rapid growth of the crypto market, South Korea has established a virtual asset regulatory agency and investigative bureau aimed at strengthening supervision of the virtual asset market and establishing market order early.

Proposal to Restrict Credit Card Purchases of Cryptocurrencies Overseas

The Financial Services Commission (FSC) stated that the primary purpose of this new amendment is to restrict cryptocurrency traders from purchasing cryptocurrencies on foreign exchanges using credit cards. In the legislative notice, the FSC pointed out that this decision was made out of concerns regarding illegal outflow of funds, money laundering, and encouragement of speculative activities. Regulatory authorities plan to collect public feedback on the proposed amendment by February 13, review and vote on it, with the goal of formal implementation by the first half of 2024.

Under the 2021 Financial Reports Act amendment, cryptocurrency users in South Korea must conduct transactions using withdrawal and deposit accounts from local exchanges and undergo real-name verification (KYC). Trading platforms also need rigorous approval to provide fiat-to-crypto services, including establishing partnerships with local banks.