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BOK Governor Rhee Flags Rule-Evasion Risks in Overseas Crypto Cards, Vows Close Monitoring
Summary
- Rhee Chang-yong, governor of the Bank of Korea, said he will closely examine concerns that overseas crypto cards could be used to bypass financial regulations and expose users to protection risks.
- He said overseas crypto cards, which are largely based on dollar stablecoins, carry high fees and multiple risks, while domestic authorities also face limits in tracking transaction activity.
- At a parliamentary audit, concerns were raised that overseas crypto cards could be misused to avoid customs duties and that Korean users would be vulnerable if issuers went bankrupt or were hacked, prompting Rhee to say he would work closely with relevant agencies.
Forecast Trend Report by Period
Bank of Korea Governor Rhee Chang-yong said he will closely examine concerns that overseas crypto cards could be used to bypass financial regulations and leave users inadequately protected.
At a parliamentary audit on Oct. 12, Rhee responded to a question from Kim Nam-jun, a lawmaker from the Democratic Party, about the potential for regulatory evasion through overseas crypto cards. He said the products pose multiple risks because the issuers are all based abroad and are largely built on dollar stablecoins.
Crypto cards allow users to pay with virtual assets such as Bitcoin. When a user makes a crypto payment, an intermediary converts the assets into fiat currency and pays the merchant. Rhee said that process adds another layer of intermediation and that fees appear to be significantly higher than those for conventional payment methods.
The parliamentary audit also raised concerns that use of overseas crypto cards is increasing even as domestic authorities have limited ability to track the transactions. Kim said deals may not be fully reflected in existing payment and capital-movement statistics when users transfer assets to overseas crypto exchanges and then spend through crypto cards.
Kim also raised the possibility that the cards could be used to avoid customs duties when consumers buy high-priced goods abroad. He said online posts are being shared that explain how to avoid tariffs while promoting crypto-card discounts. He also cited another problem: Korean users may struggle to receive adequate protection if overseas card issuers go bankrupt, freeze accounts or are hacked.
Rhee said the central bank will continue to monitor the issue closely, improve information and work closely with relevant agencies. The BOK plans to review transaction patterns and related risks involving crypto cards issued by overseas operators and discuss response measures with other authorities.
