South Korea is considering banning the use of credit cards to purchase cryptocurrencies in an effort to prevent illegal capital outflows and money laundering. The proposal would designate cryptocurrencies as “prohibited for payment” under the country’s credit finance laws, effectively preventing consumers from buying digital assets with credit cards from both domestic and foreign exchanges. Currently, identity verification rules only apply to domestic exchanges, but the proposed ban would extend these restrictions to overseas platforms. The public consultation period for the proposal will run until February 13, 2024, with the amendments expected to pass through the legislative process in the first half of the year if approved.
South Korea has already implemented strict regulations on cryptocurrencies, such as banning financial institutions from directly handling virtual asset transactions. However, banks are still allowed to provide payment services and maintain cryptocurrency exchange accounts. The country also requires domestic exchanges to partner with local banks and verify user identities for withdrawal and deposit accounts. These regulations have resulted in a consolidation of activity towards major South Korean platforms and made it more difficult for individuals to trade virtual assets anonymously. However, overseas and decentralized exchanges remain options for those seeking to bypass identity checks and local regulations.
The proposal to ban credit card purchases of cryptocurrencies aims to address concerns over illegal outflows of domestic funds, money laundering, speculation, and encouragement of speculative activities. If implemented, this ban could further restrict individuals’ ability to easily invest in cryptocurrencies and potentially impact the adoption and growth of the crypto market in South Korea.
Overall, South Korea’s move to ban crypto purchases with credit cards highlights the country’s ongoing efforts to regulate and monitor the cryptocurrency industry to mitigate potential risks, but it may also hinder accessibility and convenience for cryptocurrency investors.
