• Credit Card Ban: The proposed amendment would effectively prevent South Korean citizens from using credit cards to buy crypto, primarily targeting transactions on foreign exchanges.
• Investor Protection Focus: This decision aligns with the FSC's broader push for investor safety, evidenced by recent regulations requiring cold wallet storage and deposit fees for crypto exchanges.
• Public Feedback and Timeline: The public has until February 13th to provide input on the amendment, with a final vote and potential implementation expected in the first half of 2024.

South Korea's cryptocurrency market is facing tighter regulations as the Financial Services Commission (FSC) proposes a ban on credit card purchases of digital assets. This move aims to curb illegal capital outflow, money laundering, and speculative trading while protecting investors from potential risks.

Protecting Investors and Curbing Risks: The FSC's concerns center around the potential misuse of credit cards for speculative crypto purchases, which can lead to financial instability and debt accumulation. Additionally, the ban aims to prevent illegal capital flight and money laundering activities facilitated through foreign exchanges.

Strengthening Regulatory Framework: Beyond the credit card ban, the FSC has implemented other measures to build a secure and transparent crypto market. These include:

• Real-Name Trading: Since 2021, Korean crypto users must trade using real-name verified accounts on domestic exchanges. This enhances transparency and accountability.
• Stricter Exchange Licensing: Platforms offering fiat-to-crypto services must now undergo rigorous licensing procedures, including securing partnerships with local banks. This ensures compliance with regulations and protects customer funds.
• Cold Wallet Storage: Proposed rules require exchanges to store at least 80% of customer deposits in cold wallets, significantly reducing the risk of online hacks and theft.

The Future of Crypto in South Korea: The proposed credit card ban and ongoing regulatory efforts signal South Korea's commitment to responsible crypto market development. While the ban may face pushback from some users, it ultimately aims to create a safer and more sustainable environment for crypto trading and investment within the country.