Bank of Korea Governor Shin Hyun-song said crypto cards issued and operated abroad carry risks including regulatory circumvention and difficulty in tracking fund flows, and that the central bank will work with related agencies to respond.
Shin made the remarks on the 12th at a parliamentary audit held by the National Assembly's Finance, Economy and Planning Committee at the Bank of Korea, responding to questions from Rep. Kim Nam-joon of the Democratic Party of Korea. "The entities behind crypto cards are all based overseas and they mainly rely on dollar stablecoins, so the various risks you pointed out do exist," he said. "We will monitor the situation closely, improve the related information we hold and consult closely with relevant agencies."
Crypto cards are payment instruments that use virtual assets such as bitcoin or stablecoins to buy goods and services. One common method converts the virtual asset into fiat currency during the transaction and pays the merchant in that currency.
Shin also explained that crypto card payments add an extra layer of intermediation. "When you use a crypto card, an intermediary converts the asset into fiat currency again before making the payment, so there is one more step in the chain," he said. "We understand the fees are generally considerably higher than those of other payment methods."
Kim said the volume of payments made through overseas crypto cards and the associated fund flows may not be fully captured in financial regulators' statistics. Because the payment instruments are provided by overseas operators, he argued, they could be used to bypass domestic rules and could make foreign currency flows harder to trace. He also raised concerns that protecting domestic users and compensating them for losses would be difficult in the event of an operator's bankruptcy, an account freeze or a hacking incident.
Shin acknowledged the risks of overseas payment instruments built on dollar stablecoins and said the central bank would step up efforts to secure related information and strengthen monitoring.