From Sanctions to Stablecoins: South Korea Redraws the Compliance Map

In January 2026, South Korea will enact a new legislation on the subject of sanctions compliance. It marks a quiet revolution:

Any company with a sanctioned shareholder, no matter how small is the ownership percentage, will be treated as sanctioned itself.

The approach shifts the focus from surface-level KYC to ownership tracing. From the perspective of crypto exchanges and fintechs, compliance officers will be asking who’s really behind the wallet, and who really benefits from the account?

The kind of questions that require visibility into structures, not just names.

Then came the most recent debate among the presidential candidates on the subject of stablecoins, and with it, a proposal to launch a won-backed stablecoin.

What for?

Stem capital flight.

The candidate’s plan is to reduce dependence on offshore USD-backed coins like USDT and USDC. Reclaim control over monetary flows that have been bleeding out of local exchanges (US$40B in Q1’25 alone).

As of today, the Korean law prohibits the domestic issuance of a won-backed stablecoin. But if this policy gains traction, it could flip the dynamic. Exchanges may be required to hold reserves, register stable coin products, and comply with the regulatory oversight.

And the KYC impact? Huge.

If a locally regulated stablecoin becomes a core part of the market, fintech companies won’t just need to verify users on-ramp. They will need to trace movement, exposure, and counterparties across the coin’s full lifecycle: tracking not just who buys in, but where the money flows next.

KYC becomes less about access and more about continuity.

What do these policies have in common?

The same underlying principle: transparency by design.

Whether it’s about tracing ownership or stabilizing capital flight flows, South Korea is signaling that the future of financial compliance isn’t just about who’s on the list. It’s about who’s in the network.

Thanks for reading.