South Korea Targets Offshore Stablecoin Gift Card Payments as Money Laundering Risk
South Korean financial regulators have launched an investigation into services that allow users to purchase mobile gift cards in South Korea using offshore-issued stablecoins. The Financial Services Commission (FSC) has identified a potential money laundering bypass channel through these services, which enable the buying and selling of easily cashable gift cards with virtual assets acquired without customer verification procedures.
The FSC's investigation is focused on 'KRWQ', a stablecoin pegged 1:1 to the value of the South Korean won, issued by blockchain company IQ. The service allows users to purchase mobile gift cards from approximately 90 South Korean brands through decentralized exchanges (DEXs) without separate customer verification.
Regulators have also identified that mobile gift cards can be purchased with coins from JPYC, a Japanese yen stablecoin issuer, through the Web3 service Unify and DEXs. The FSC has warned that offshore operators are subject to the Specified Financial Information Act if they conduct business targeting South Korean users.
The regulator plans to take phased measures including document requests, corrective orders, and notifications to relevant agencies, with strict enforcement if violations are confirmed.