- Buying crypto via credit card on foreign exchanges presents risk of speculation, money laundering
- The proposal is expected to pass, the ban will take effect by the summer of this year
South Korea’s Financial Services Commission (FSC) has proposed a ban on buying crypto with credit cards over concerns related to money laundering and illegal cash outflow.
The country’s main financial regulator wants to change its credit finance laws to ban local citizens from purchasing cryptocurrency with credit cards. In a recent legislative notice cited by Cointelegraph, the watchdog expressed concerns about illegal cash flow and other financial crimes that could be committed as South Koreans purchase cryptocurrency from foreign exchanges.
Combating speculation and money laundering
The FSC stated that buying crypto via credit card on foreign digital exchanges presented the risks of speculation, money laundering, and overall encouragement of illicit financial activities.
Under current laws, South Korean cryptocurrency exchanges permit transactions between digital assets only via deposits and withdrawals, where it’s possible to verify the user’s identity. However, foreign exchanges don’t abide by these rules.
Review and resolution process pending
The proposal will undergo a review and resolution process, during which the public will be asked for feedback. The process will continue for just over a month. The proposal is expected to pass. The ban will then take effect by the summer of this year.
South Korea is cracking down on crypto after Terraform
This measure is the latest in a series of what looks like crackdowns on crypto. At the end of December last year, South Korea made around 6,000 public officials’ crypto assets and other asset holdings publicly available under new laws aimed at increasing transparency.
It’s important to note that Terraform Labs, the creator of the failed LUNA crypto and TerraUSD stablecoin, was based in South Korea.
The failures had a domino effect, pushing the global crypto market into a prolonged bear run. In April last year, the South Korean Prosecutor’s Office seized around $160 million worth of assets from a number of individuals linked to Terraform Labs, including Daniel Shin, one of the founders.
