South Korea

The licensing routes are layered. Only electronic-currency issuance is licensed by the FSC; other electronic financial businesses (including payment-gateway activity) must register with the FSC and are supervised and inspected by the FSS; credit-card business requires FSC approval under the Specialized Credit Finance Business Act; foreign providers generally must incorporate locally. The bank-PSP versus non-bank-PI/EMI distinction matters here: the registration-and-supervision burden falls most heavily on non-bank electronic financial businesses, which carry the qualified-personnel, minimum-capital and local-infrastructure conditions that constitute the core market-access friction. Market access requires a local entity plus those conditions — a material friction for foreign PSPs relative to an EU passport, where a single authorisation passports across the bloc.

This is a standing W1a anchor: e-currency issuance is licensed, while most other electronic financial business is registered, under an FSC-centred pre-approval and post-supervision system.

Outlook

The W1a baseline is established and confirmed. No structural change to the licensing architecture is signalled this cycle; the live conduct-and-safeguarding movement sits in W1b, and forward stablecoin licensing depends on the DABA framework tracked in W2. The local-incorporation requirement remains the durable structural feature for foreign entrants.

The same EFTA revision package brought BNPL within the perimeter at a level similar to credit-card business. Only stock companies with a debt ratio of 180% or below may be approved; the per-customer BNPL limit is KRW 300,000; and quarterly credit offering is capped at 15% of prior-quarter prepayment volumes. Korea has therefore codified hard caps on BNPL — a per-customer limit plus a quarterly cap — that are tighter than the conduct-led UK/EU trajectory, which has leaned on conduct standards rather than numeric ceilings.

Outlook

The W1b position is strengthening and confirmed. The 100% safeguarding floor and the codified BNPL caps are now standing features of the conduct regime; both were sourced to FSC primary material. No further conduct-package change is signalled this cycle, though the consumer-protection reforms tracked in W10 interact with the broader conduct surface.

Private development is running ahead of the regime. BDACS launched KRW1 in September 2025 as a proof-of-concept — the first fully collateralised won-backed stablecoin, on Avalanche, backed 1:1 by won held in escrow at Woori Bank — and it remains a proof-of-concept rather than commercial issuance. It demonstrates technical readiness ahead of any enacted framework, and an eight-bank consortium is developing a shared won-pegged stablecoin in parallel.

Outlook

The W2 trajectory is stalled/pending and the standing position is held at Assessed confidence: the current legislative status rests on T3 journalism with no T1 anchor from the FSC, BOK or National Assembly, a gap noted in the register. The standing position must be read as 'not in force, delayed past the June 2026 elections.' Watch for an FSC/BOK/Assembly primary source to anchor DABA status; until then the bank-led-versus-open dispute remains the decisive unresolved question.

The analytical significance is structural divergence: Korea has no DORA-style critical-third-party oversight, so third-party and cloud oversight run through outsourcing rules and network-separation requirements rather than a designated-CTP designation regime as in the EU and UK. The obligation applies to both bank-PSP and non-bank operators.

Outlook

The W3 position is stable and confirmed. No new resilience instrument is signalled this cycle. The standing divergence from EU/UK critical-third-party regimes remains the module's defining feature; any future move toward a designated-CTP framework would be the development to watch.

The live development is the FSC's proposed card-fee amendment. On 24 December 2024 the FSC announced proposed amendments lowering the preferential fee-rate cap for small and medium merchants from 0.5–1.5% to 0.4–1.45% and aligning large-merchant fee-designation timing with that of SMEs. This further compresses card-issuer and processor economics for the SME merchant band and continues the FSC's repeated downward fee resets.

Outlook

The W4 trajectory is tightening, but the proposed amendment is correctly stated as proposed: its enactment status as of June 2026 is unverified, a gap flagged in the register. If enacted, the cut would extend the long downward administrative trajectory on merchant discount. Watch for an FSC confirmation of in-force status.

Two forward movements stand out. The Ministry announced an Integrated Overseas Remittance Management System for real-time unified oversight of no-documentation remittances, targeted for January 2026; under current FETA, individuals can remit over US$5,000 a year without documents only through a designated bank, capped at US$100,000. Abolishing the bank-designation system and allowing up to US$100,000 no-doc remittance through all financial institutions would materially open the corridor to non-bank MTOs and intensify bank competition. Separately, amendments to FETA promulgated 2 June 2026 take effect in December 2026 after a six-month grace period, requiring companies providing cross-border digital-asset transfer services to register with the Ministry and report via the BOK foreign-exchange reporting network; this brings crypto and stablecoin remittance corridors — which crypto.news reports grew 380% in three years, surpassing banks in some segments — into the FETA registration-and-reporting perimeter. As a dated corridor item, internet-only K bank completed phase one of 'Project Pax', a stablecoin-based Korea–Japan cross-border remittance proof-of-concept in September 2025 with Shinhan, Nonghyup and Japanese partners, with phase two targeting SWIFT-network interoperability and PvP settlement.

Outlook

The W5 trajectory is escalating. Cross-border policy is liberalising on volume while tightening on crypto. Whether the Integrated Overseas Remittance Management System actually launched in January 2026 is unverified six months after the planned date, a gap noted in the register; the FETA crypto-transfer reporting regime is due in force December 2026. The illicit-finance dimension of the FETA crypto-transfer regime is routed to FIM.

This structural picture is the backdrop against which the specific commercial events tracked in W13 — the Naver–Dunamu merger, bank stakes in exchanges and won-stablecoin commitments — unfold.

Outlook

The W6 trajectory is consolidating, at Assessed confidence on vendor sourcing. Vertical integration and tokenisation are the directional themes; the prospective fourth internet-only bank licence is the structural decision to watch. Specific announced deals are carried as W13 events rather than here.

The litigation posture has shifted toward the exchanges. Dunamu filed a formal objection in Seoul against the FIU fine — alleging violations of the Act on Reporting and Using Specified Financial Transaction Information — which under Korean administrative law automatically suspends enforcement of the KRW 35.2bn penalty pending precedent-setting court review; the suspension defers the deal-risk overhang on the merger. A local judge then overturned Bithumb's six-month suspension in May 2026, part of regulators' increased crypto oversight alongside Dunamu's partial suspension and Korbit's penalty, consistent with the Hanbitco precedent where a Seoul court struck an FIU KYC fine on the basis that the violations did not lead to money laundering. Court losses for the FIU weaken the deterrent value of suspension penalties and bolster exchanges' litigation posture across the campaign.

Outlook

The W7 trajectory is escalating, held at Assessed confidence. The timing of Dunamu's objection — filed in late 2025 or early 2026, with the penalty paused as of February 2026 — should be specified for complete litigation context, a gap noted in the register. The underlying AML/KYC substance is routed to FIM; WPM carries the payments and M&A-precedent angle.

The analytical point is that institutionalised fee transparency exposes the wide prepaid-versus-card margin gap — prepaid operators retain roughly 80% of fees against roughly 10% for card — directly relevant to acquirer and PG economics.

Outlook

The W8 position is stable and confirmed on the disclosure data. The fee-disclosure regime is now a recurring transparency surface; the prepaid-versus-card retention gap is the structural feature to track, alongside the card-fee-cap movement carried in W4.

Outlook

The W9 trajectory is stable, at Assessed confidence. The thematic shift to watch is whether sovereign deposit-token work converges with or is displaced by the private won-stablecoin track; the specific private commitments behind that shift (Naver's KRW 10tn earmark, Kakao's deposit-token project) are carried as commercial events in W13, and the regulatory framework that would govern issuance sits in W2.

The live reform is the no-fault amendment. Proposed amendments to the Telecommunications Fraud Victim Refund Act would require the financial companies used by both victim and criminal to each cover half of voice-phishing damages, with per-case caps of KRW 10m–50m and liability waived for victim intent or gross negligence — a shift from the negligence-based standard, estimated to cost up to roughly KRW 280bn a year. This moves toward shared no-fault reimbursement, analogous in spirit to the UK PSR APP-fraud split-liability model, and materially raises financial-firm liability exposure. The FSS is also reviewing guidance to expand the fraudulent-card-use definition under the SCFBA to cover phishing/smishing-induced cardholder losses.

Outlook

The W10 trajectory is escalating. The no-fault shift is the defining forward change; its passage and the final cost-allocation mechanics are the items to watch. The reform falls on bank-PSP institutions, raising their liability exposure relative to the current negligence-based standard.

Per Sentinel, KoFIU launched a taskforce on 29 December 2025 to revamp the FTRA ahead of the 2028 FATF mutual evaluation: extending the travel rule below KRW 1m, building a UBO database, requiring a designated senior AML executive, adding AML rules for attorneys, CPAs and tax accountants, and subjecting stablecoin issuers to AML obligations equivalent to traditional institutions. This forward expansion materially raises the compliance load for VASPs and any future won-stablecoin issuer.

Outlook

The W11 trajectory is escalating and Sentinel-confirmed. The 2028 FATF mutual evaluation is the anchoring tracker item, with the sub-KRW1m travel rule and stablecoin-issuer AML equivalence the substantive changes ahead. WPM carries the finding only; detailed illicit-finance analysis is routed to FIM.

The asymmetry is narrowing on the corridor side. Overseas transfers via the five major commercial banks reached roughly US$1.108tn (about KRW 1,590tn) in 2025, while remittances via the five largest won-denominated crypto exchanges rose to KRW 163.55tn (about US$125.8bn). Crypto-exchange remittance volumes now rival bank corridors in some segments, pressuring traditional correspondent-banking economics. Bank-led modernisation is also under way: NH Nonghyup and Hana piloted Partior cross-border ledger settlements in December 2025, compressing settlement from days to minutes.

Outlook

The W12 trajectory is modernising and confirmed on BOK primary data. The structural question is whether bank-led blockchain and stablecoin pilots (Partior, Project Pax) preserve the banks' settlement-core advantage as crypto-exchange corridor volumes grow. The corridor-side erosion of the bank/non-bank asymmetry is the development to track.

Two investment events accompany the merger. Hana Bank agreed on 15 May 2026 to buy a 6.55% stake in Dunamu for roughly KRW 1tn (about US$670m), closing 15 June, becoming its fourth-largest shareholder, with plans to jointly develop won-pegged stablecoins, blockchain remittances and tokenised securities; this announced strategic investment signals bank-fintech convergence ahead of any won-stablecoin framework. Separately, following its Dunamu acquisition Naver earmarked roughly KRW 10tn over five years to build a won-pegged stablecoin platform, while Kakao announced a parallel retail-deposit-token project; the won amount is disclosed but the USD figure is not publicly disclosed. Woori Bank also announced an April 2026 MoonPay partnership for stablecoin technology.

Outlook

The W13 trajectory is active. The Naver–Dunamu close, now targeted at roughly 30 September 2026, is the pivotal event; completion is conditioned by FTC antitrust review, stake-cap legislation and the live FIU AML-enforcement precedent overhanging Dunamu (carried in W7). Bank stakes in exchanges and the KRW 10tn private stablecoin commitment pre-position for the pending DABA framework tracked in W2.