South Korea Cracks Down on Cryptocurrency, Credit Card Purchases Banned

In early January 2023, the Financial Services Commission (FSC) of South Korea made several decisions that were quite important. A legislative notice published on January 3 highlighted the Financial Services Commission’s (FSC) concerns about the potential for money laundering and illicit financial outflows linked to the acquisition of cryptocurrencies by South Koreans from foreign exchanges.

As a result of these problems, a change in the Ordinance on the Implementation of the Law on Financial Activities Specialized in Crediting has been proposed as a potential solution. The main purpose of this amendment is to I forbid the use of credit cards to purchase cryptocurrencies, with particular emphasis on transactions that take place on international exchanges. The implementation of this action is a component of a more comprehensive plan to strengthen regulations in the Bitcoin industry.

In addition, the Financial Services Commission (FSC) has recommended an amendment to the Credit Financing Act that would essentially ban South Korean individuals from buying cryptocurrency with credit cards when making purchases. In line with the government’s larger initiatives to regulate cryptocurrency businesses in a stricter manner, this venture is being undertaken. At the end of the month of January 2023, the Ministry of Justice announced that it will develop a “Virtual Currency Tracking System”, giving priority to the development of this system. The intention of this system is to stop operations that involve money laundering and are made possible by cryptocurrency.

South Korea’s approach to cryptocurrency regulation will undergo a major transformation in 2023. The Virtual Asset Consumer Protection Act has just been passed, as recently stated by the Financial Services Commission (FSC). With respect to the cryptocurrency sector, this law places an emphasis on consumer safety, transaction transparency, and market discipline regarding the industry. In addition, a new and comprehensive cryptocurrency law will be introduced in South Korea by 2024 to further institutionalize the cryptocurrency industry.

From the month of April 2023 onwards, the South Korean parliament is expected to pass a measure to govern the digital asset market. This new development follows the introduction of 18 laws relating to digital assets that are currently being debated in the Political Affairs Committee of South Korea’s National Assembly.

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