South Korea’s FSC warns against illegal exit and gambling via credit cards on overseas cryptocurrency exchanges. This strict stance comes in the wake of South Korea’s $100 billion cryptocurrency surge, with 5,419 companies under scrutiny by the NTS. The FSC mandates the submission of internal reports on cryptocurrencies, with two phases of legislation that followed each other throughout 2023.
South Korea’s Financial Services Commission (FSC) has raised concerns over the illicit promotion of gambling through credit card transactions on foreign cryptocurrency exchanges.
“We are giving a legislative notice on the amendment to the Decree on the Implementation of the Law on Specialized Financial Businesses in Credit, which includes provisions such as adding virtual assets to the list of prohibited card transactions,” stated FSC.
“Therefore, virtual assets are stipulated as subject to payment prohibition in accordance with Article 2. Point 1 of the “Act on the Protection of Virtual Asset Users,” the statement points out.
According to current legislation, local cryptocurrency exchanges only allow transactions between virtual assets through deposit and withdrawal accounts in which the user’s identity can be verified, but these rules do not apply to foreign crypto exchanges, according to local media Yonhap.
Under a 2021 amendment to the financial reporting law, South Korean crypto users must trade using withdrawal and deposit accounts on local exchanges, verified under their real names. Local exchanges must also make rigorous licensing preparations to provide fiat-to-crypto services, including obtaining a partnership with a local bank.
The financial services regulator is seeking public views on the proposal, which will run until February 13. It is expected to go through a review and resolution process and its goal is for it to come into force in the first half of 2024.
South Korea Cracks Down on Cryptocurrency Use
According to a recent statement, the regulator is increasingly concerned about South Korean citizens using credit cards to purchase cryptocurrencies, potentially facilitating money laundering or engaging in illegal gambling. It is important to note that gambling is banned in South Korea.
Separately, a media outlet recently reported that South Korea’s cryptocurrency boom has seen an unprecedented $100 billion in virtual assets dominate offshore accounts, reflecting a significant shift in the country’s financial sector.
However, according to the National Tax Service (NTS), virtual assets accounted for more than two-thirds of the value of accounts registered abroad this year, with 5,419 residents and companies declaring ownership of assets through these accounts.
South Korea Tightens the Siege on the Use of Cryptocurrencies
Meanwhile, South Korea’s FSC now requires its internal employees to run crypto reports for their holdings. This measure is the second phase of the legislation.
However, the FSC sent an administrative notice to internal employees. It asked them to report their cryptocurrency holdings, as defined in the Specific Financial Reporting Law.
The employees to whom this measure applies are those who currently perform functions related to crypto, as well as employees who have performed these functions in the last six months.
An FSC official added that the agency planned to complete the review in the second half of 2023 following an administrative notification. However, no updated information has yet been provided.
Among the details that will be necessary on the form are the type of cryptoassets held, as well as the date of acquisition, the quantity and the amount.
By Leonardo Perez
