https://en.sedaily.com/finance/2026/02/05/korea-to-mandate-freeze-burn-functions-for-won-backed

The South Korean government plans to impose anti-money laundering (AML) obligations on stablecoin issuers equivalent to those required of financial institutions. Issuers will be mandated to build in freeze and burn functions at the time of issuance, enabling immediate asset freezing if coins are used for money laundering. The so-called "coin real-name system," or travel rule requiring sender and recipient information disclosure, will also be expanded to cover all transactions regardless of amount.

The Korea Financial Intelligence Unit (FIU) announced these measures in its "2026 Anti-Money Laundering Key Implementation Plan" at a policy advisory committee meeting on money laundering and terrorist financing prevention held Monday.

Mandatory AML Compliance for Stablecoins

The FIU views stablecoins as posing greater money laundering risks than other virtual assets due to their high potential for mass adoption. Accordingly, stablecoin issuers will be subject to basic AML obligations imposed on financial institutions under the Act on Reporting and Using Specified Financial Transaction Information, including customer due diligence, suspicious transaction reporting, and internal controls. Enhanced management measures will be required for transactions deemed high-risk, such as those involving personal wallets or overseas operators.

During a preliminary briefing, Ha Ju-sik, director of institutional planning at the FIU, responded to questions about whether strict regulations contradict the decentralized finance philosophy of stablecoins. "Even with these regulations, stablecoins remain highly susceptible to money laundering," Ha said. "Failing to implement even these measures would mean abandoning our anti-money laundering responsibilities."

Tracking Virtual Asset Transactions Under 1 Million Won

The government plans to expand the travel rule, currently applied only to virtual asset transactions of 1 million won ($700) or more, to track small-amount split transactions designed to evade detection. The travel rule requires sending exchanges to provide sender and recipient information to receiving exchanges. New obligations will also be imposed on receiving exchanges to secure this information. Additional measures such as transaction rejection are being considered for suspicious transactions. For transactions between domestic exchanges and personal wallets or overseas exchanges, only low-risk transactions where the sender and recipient are the same person will be permitted, aiming to enhance transaction transparency.