South Korea Overhauls AML Rules as Stablecoin Legalization Looms – Is Crypto Compliance Finally Catching Up?

South Korea’s financial watchdog is tearing up its anti-money laundering (AML) playbook—just as the country prepares to legitimize stablecoins. The move signals a regulatory scramble to avoid another Terra-style debacle while pretending they’ve been ahead of the curve all along.

The AML Shake-Up

No specifics yet, but insiders hint at stricter transaction monitoring for crypto firms and deeper KYC claws. Because nothing says ‘innovation’ like treating digital assets like suspicious wire transfers to offshore banks.

Stablecoin Countdown

With legislation expected by Q1 2026, regulators are desperate to plug gaps before pegged tokens—theoretically ‘safe’—flood the market. Because if there’s one thing crypto excels at, it’s exploiting regulatory gray areas faster than a Goldman Sachs algo.

The Punchline

Watchdogs bark loudest after the herd’s already bolted. South Korea’s pivot might prevent the next collapse—or just add bureaucratic friction to an industry that’s already 10 steps ahead.

South Korean Regulator Readies Stablecoin Regulations

The regulator is likely to impose entry restrictions and business conduct regulations. Many of these will likely focus on the security of the assets that underpin any South Korean stablecoins, as well as data reporting criteria.

An FIU official said that December’s research report would “serve as a foundation for developing AML response measures in response to changes in the VIRTUAL asset industry and the institutionalization of stablecoins.”

The official added that the measures WOULD help “improve and supplement the existing system.”

The FIU currently plays a key role in policing domestic crypto exchanges and ensuring their AML compliance.

And the reorganization appears to suggest it expects to become the top AML regulatory authority for stablecoin issuers, despite plans to scrap its parent organization, the Financial Services Commission (FSC).

President Lee Jae-myung has previously announced his intention to do away with the FSC. He wants to merge its operations with those of the finance ministry and the Financial Supervisory Service.

President Lee Jae Myung’s approval rating has dropped for the second straight week, sinking to a record low of 51.1 percent, a poll showed Monday. The slide comes amid growing controversy over his Liberation Day pardons. https://t.co/VYWndBDJoZ

However, recent government plan announcements have made no further mention of scrapping the FSC. And the Blue House has even assigned it crypto-related tasks for 2025.

FIU Set for Important Regulatory Role?

The FIU’s plans, which involve conducting a study on international stablecoin regulations, appear to suggest the regulator expects to police the industry ahead of the rollout of legislation.

Several stablecoin bills are on the agenda at the National Assembly. However, lawmakers are yet to fine-tune the details of these draft laws. They continue to deliberate matters like the possible launch of stablecoin lending services.

Critics note that the Financial Action Task Force (FATF) and other organizations have warned that stablecoin adoption can lead to increased money laundering risks.

The Bell Korea noted that many countries, including the United States, have been “quick to develop countermeasures.” Conversely, it noted, South Korea, is a “latecomer,” in this regard, as it “still lacks a comprehensive system.”

The media outlet also added that South Korea “still lacks a clear legal definition of stablecoins.”

Thus far, most AML-related legislation (including the Special Financial Transactions Act) and regulations relate to exchanges and crypto wallet operators.

Big Businesses Ready to Make Stablecoin Moves

While lawmakers are yet to FORM a firm consensus on stablecoin legislation, both major parties agree that businesses should be allowed to issue or make use of KRW-pegged coins.

Some of the country’s biggest banks and tech firms have responded by registering stablecoin-related trademarks.

Others have already launched dedicated stablecoin business units as they await the National Assembly’s green light.

Experts expect companies like Kakao and Naver to make significant progress in the stablecoin space.

Both already have a sophisticated network of web-based services, ranging from e-payment platforms to banking and software-as-a-service (SaaS) offerings.