South Korean Card Companies Block Transactions to Overseas Cryptocurrency Exchanges
South Korean card companies are reportedly working on blocking payments to overseas cryptocurrency exchanges. Currently, 20 major crypto exchanges are blocked but that number is expected to increase, according to the Korean Credit Finance Association.
Also read: South Korean Officials Caught Trading On Insider Knowledge of Crypto Regulations
Blocking Payments Overseas
South Korean card companies have been working on blocking payments to overseas cryptocurrency exchanges, local media reported the Credit Finance Association of Korea revealing.
The association is a non-profit organization with 68 members: 8 credit card companies, 21 leasing companies, 21 installment financing companies, and 18 venture capital companies. An official of the association was quoted by Yonhap last week:
Credit [card] companies are voluntarily blocking payments to overseas virtual currency exchanges.
“We will continue to prevent transactions from being carried out if a foreign [cryptocurrency] exchange is registered as a merchant,” the news outlet further quoted the association.
8 Card Companies Onboard
The association explained that “eight domestic credit card companies are in the process of suspending credit / check card transactions so that they [users] cannot buy virtual currency at overseas virtual currency exchanges with domestic cards,” the publication noted.
There are exactly 8 members of the association that are card companies: BC Card, Hyundai Card, KB Kookmin Card, KEB Hana Card, Lotte Card, Samsung Card, Shinhan Card, and Woori Card.
“Card companies have adopted the system in line with the government’s efforts to tackle speculative investment in virtual currencies,” Business Korea reported. “However, they express concerns over the opposition from domestic investors. This is because it can lead to a legal dispute when a customer file a suit as there is no clear legal basis on banning the payment in foreign exchanges.”
The publication quoted the association on Monday:
Currently, only 20 major digital currency exchanges are blocked but we will confirm and share information about exchanges grasped by individual card issuers. An increasing number of exchanges will be continuously blocked in the future.
The news outlet also quoted industry sources clarifying, “Lotte Card and Shinhan Card have introduced systems blocking transactions by investors for the purchase of digital tokens from 20 overseas virtual currency exchanges using either debit or credit cards.” Woori Card reportedly did the same on January 18 while other card issuers, including Kookmin Card, are planning to complete the blockade by the end of this week.
Furthermore, the publication pointed out that there is a growing controversy over how effective this method to prevent investors from using overseas exchanges is, citing that “investors can purchase digital currencies through foreign simple payment systems, including Paypal.”
Last month, some Korean card companies discontinued their credit card points-to-cryptocurrency conversion services. Shinhan Card and KB Kookmin Card have discontinued their service to convert card points to bitcoin, as news.Bitcoin.com previously reported.
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Images courtesy of Shutterstock and the Credit Finance Association of Korea.
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