South Korea's Financial Services Commission is considering banning local residents from buying cryptocurrencies using credit cards on foreign platforms in an effort to prevent capital outflows.
In addition, the financial regulator believes that changes to South Korean legislation will help reduce the risks of money laundering through foreign cryptocurrency companies, Cointelegraph reported.
In a legislative notice dated January 3, the Financial Services Commission introduced a draft to partially amend the Ordinance on the Enactment of the Specialized Credit Finance Business Act. According to the notice, the amendments are mainly aimed at preventing the illegal outflow of domestic funds overseas through card payments on overseas crypto exchanges, money laundering, speculation, and the promotion of speculative activities.
Also on January 4, South Korea's Financial Services Commission published a message on its official X (Twitter) page stating that it is adding virtual assets to the list of prohibited card transactions.
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Current South Korean law allows local cryptocurrency exchanges to conduct transactions between virtual assets only through deposit and withdrawal accounts, as this allows the identity of the user to be verified. However, such requirements do not apply to foreign crypto exchanges.
The Financial Services Commission has until February 13 to receive comments and suggestions on the amendments from institutions, organizations or individuals, which they can leave on the website of the Center for Public Participation in Legislation.
If reviewed and approved, the new requirements and rules will be implemented in the first half of 2024.
As a reminder, in December 2023, South Korea's Financial Intelligence Unit, in cooperation with the Digital Asset Exchange Association, called on all cryptocurrency market participants to report unlicensed exchanges offering their services in the region. The main purpose of such reports is to find local and foreign virtual asset business operators that are not operating in accordance with Article 7 of the Special Financial Information Act and are not offering their services and products to Korean citizens.