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My Crypto Lawyer Sec News South Korea mulls banning credit card payments for crypto

Amid widespread regulatory scrutiny against the cryptocurrency industry in the United States, South Korea’s top financial regulator has joined in and suggested a ban on using credit cards to purchase or sell cryptocurrencies, citing illegal overseas outflows of domestic funds and money laundering risks.

Specifically, the country’s Financial Services Commission (FSC) has associated the credit card purchases of crypto assets by South Korean citizens from foreign crypto exchanges with the above risks, urging the government to prohibit such practices in a legislative notice published on January 3.

As per the statement:

“Concerns have been raised about illegal overseas outflows of domestic funds due to card payments on foreign virtual asset exchanges, money laundering and speculation, and promotion of such activities. (…) Accordingly, virtual assets (…) are stipulated as prohibited for payment.”

According to the current laws in South Korea, local exchanges can allow transfers between crypto assets only through deposit accounts with real name verification. On the other hand, as Yonhap reports, these standards do not apply to foreign exchanges.

In the meantime, the agency said that its ban proposal would be open to public comments from institutions, organizations, and individuals until February 13, after which it will go through a review and enactment process in the next six months.

South Korea vs. crypto

Meanwhile, South Korea is the home of the collapsed Terra (LUNA) ecosystem, and its founder, Do Kwon, who is currently in custody in Montenegro, with South Korean authorities seeking his extradition, all of which partially explains the regulator’s position of the crypto dealings.

As a reminder, Kwon escaped to the Western Balkans country following the crash of the Terra platform, and the Montenegrin Appeals Court has recently overruled the High Court’s previous decision to extradite him to his home country, as Finbold reported on December 19.

Currently, there are no specific bans against crypto in South Korea, and South Korean citizens can own digital assets and trade them on regulated exchanges. However, they must verify their identity using their real names, as the country has banned anonymous crypto trading.

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