South Korea Tightens Grip on Prepaid Investment Rules Amid Crypto Fears

The South Korean Fair Trade Commission (FTC) has announced a revised consumer protection guideline for prepaid installment transactions. The update, which will take effect after a 20-day notice period ending September 14, requires pre-need service providers and other prepaid installment businesses to conduct thorough reviews before making high-risk investments.

The revised guideline emphasizes the need for companies managing customer prepayments to balance stability, liquidity, and profitability. Investments with a significant risk of principal loss, including derivatives, virtual assets (cryptocurrencies), and leveraged financial products, would require prior internal review and approval.

The FTC's move is aimed at preventing scenarios where consumer prepayments are jeopardized by speculative investments. Large companies holding at least 100 billion won (approximately $75 million) in customer prepayments must establish and operate a prepayment management review committee to ensure fund management remains stable and decision-making processes are transparent.