FSC’s Warning Against Crypto Purchases with Credit Cards

The Financial Services Commission (FSC) of South Korea is raising alarms over the use of credit cards in cryptocurrency transactions on foreign exchanges. This concern stems from the potential for these transactions to facilitate money laundering or enable illegal gambling activities.

South Korea’s Growing Crypto Market

South Korea’s cryptocurrency market has witnessed a significant surge, with a reported $100 billion in virtual assets held in overseas accounts. This trend has caught the attention of the National Tax Service (NTS), leading to scrutiny of 5,419 entities. The NTS has observed that virtual assets account for a major portion of the value in registered overseas accounts.

FSC’s Internal Crypto Reporting Mandate

In a move to tighten control, the FSC has mandated its employees involved in crypto-related duties to report their cryptocurrency holdings. This directive is part of a broader legislative effort that unfolded in two phases throughout 2023. The FSC aims to ensure transparency and accountability among its staff, particularly those who have been engaged in crypto-related tasks in the last six months.

Implementation and Requirements for Reporting

The FSC issued an administrative notice to its employees, outlining the requirements for crypto asset reporting as per the Specific Financial Information Act. Employees must disclose various details, including the types of crypto assets they hold, the date of acquisition, the quantity, and the total amount. The FSC had planned to finalize these revisions in the second half of 2023, though further updates are pending.

These regulatory measures underscore South Korea’s commitment to monitoring and controlling the cryptocurrency market within its jurisdiction. The FSC’s stringent stance on credit card use for crypto purchases and the internal reporting requirements reflect a cautious approach towards the rapidly evolving digital asset landscape.