The South Korean Financial Services Commission (FSC) has introduced a proposed amendment to the Enforcement Decree of the Specialized Credit Finance Business Act, aiming to prevent citizens from using their credit cards for cryptocurrency purchases.
The prohibition is a response to growing concerns over issues such as money laundering, unauthorized financial outflows to foreign entities, and the encouragement of speculative activities associated with card payments made to foreign virtual asset exchanges.
“I think they’re a bit behind other credit issuers as most have banned the usage of credit cards to purchase crypto,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Third grade math would tell us that borrowing funds to speculate in highly volatile assets isn’t a profitable business model.”
“South Korea’s Financial Services Commission seems to have concerns regarding domestic outflows of funds when traders are moving monies around to various non-domestic exchanges,” he said. “In countries that contribute rather small percentages of global GDP, inflows & outflows of domestic funds have far greater implications to units of currency, reserves, monetary policy, etc. They’re not outlawing cryptocurrency by any means, they’re just trying to be responsible here from a monetary/policy standpoint.”
To gather input and insights, the FSC has opened the floor for feedback from the public. Individuals and organizations are encouraged to submit their opinions through the Center for Public Participatory Legislation website by February 2.
Crypto Scams Are Growing
In addition to its volatility, crypto has gained notoriety as a breeding ground for fraudulent activities. Exploiting the extreme price fluctuations of digital assets, scammers are duping unsuspecting victims with promises of quick gains during fleeting windows of opportunity.
UK banks are acknowledging this threat and responding proactively. JP Morgan Chase banned its UK customers from making cryptocurrency transactions with their debit card or an outbound bank transfer.
And last November, Lloyds Bank issued a warning to its customers highlighting the escalating incidents of cryptocurrency scams. They reported that 66% of scams originate from social platforms, particularly Facebook and Instagram. As the adoption of crypto continues to rise in the UK, regulatory bodies are monitoring the sector.
