On January 4, 2024, South Korea’s Financial Services Commission (FSC) put forward a proposal to amend its Enforcement Decree of the Credit-Specialized Financial Business Act. The amendment aims to prohibit using credit cards to purchase cryptocurrencies on foreign exchanges.
This decision concerns potential illegal outflows of domestic funds, money laundering risks, and the support of speculative behavior in the cryptocurrency trading industry.
FSC proposes ban on credit card
The FSC highlighted several risks associated with foreign crypto trading, including the potential for the illegal outflow of domestic funds, money laundering activities, speculative behavior, and the encouragement of such speculative activities. The regulatory body aims to establish a basis for cooperation with international brands and strengthen measures against foreign currency outflow and money laundering.
The proposed amendment is open for public feedback until February 13, 2024, allowing individuals and organizations to provide input and comments. Following this period, the amendment will undergo review and a voting process, with the goal of implementing the new rules in the first half of 2024.
However, a recent investigation by the Anti-Corruption and Civil Rights Commission in South Korea has disclosed significant cryptocurrency trading activities among the country’s lawmakers. Over the past three years, these officials collectively engaged in virtual asset trading worth approximately 125.6 billion won ($97.6 million).
The investigation, based on a 90-day inspection of transaction records of all 298 sitting lawmakers from May 30, 2020, to May 31, 2023, identified 18 lawmakers who owned virtual assets. Of these, 11 were actively involved in trading. The total buying and selling transactions amounted to 62.5 billion won ($48.4 million) and 63.1 billion won ($48.8 million), respectively.
Crypto transactions among lawmakers prompt regulatory scrutiny
Bitcoin emerged as one of the popular cryptocurrencies among lawmakers, and the report revealed a diverse portfolio of virtual assets, containing 107 different types. Notably, one lawmaker was found to have conducted 49 crypto transactions without reporting them, mentioning a closed exchange account.
These acknowledgments highlight the growing confluence of cryptocurrency and regulatory scrutiny, prompting South Korea to consider stricter measures, such as the proposed ban on credit card purchases for cryptocurrencies on foreign exchanges.
