"The spread of stablecoins is inevitable… anti-money laundering response methods must be strengthened"
Summary
- Kim Pil-su, a researcher at the Korea Financial Telecommunications & Clearings Institute, said the spread of stablecoins is accelerating and that a shift in supervisory approaches is unavoidable because they can circumvent traditional financial-sector AML rules.
- He said stablecoins are expanding in use beyond virtual asset trading into payment and settlement and the real economy, meaning we have entered a stage where institutional responses must follow.
- Kim raised concerns that the spread of stablecoins could expose the limits of the existing AML framework and stressed that AI-enabled AML supervision is needed to analyze the entire network.
As forecasts grow that the spread of stablecoins (digital assets whose value is pegged to fiat currency) will accelerate with future payments by artificial intelligence (AI) agents and the emergence of tokenized assets, a proposal has been made that anti-money laundering (AML) systems must be built and responses put in place accordingly.
Speaking as a presenter at the 'Forum on Trends and Review of Anti-Money Laundering Systems in Response to the Spread of Stablecoins' held on the 28th in Conference Room 2 of the National Assembly Members' Office Building in Yeouido, Seoul, Kim Pil-su, a researcher at the Korea Financial Telecommunications & Clearings Institute, said, "Because stablecoins have characteristics that can circumvent AML rules in the traditional financial sector, a shift in supervisory approaches is unavoidable," adding the above.
Kim projected that the issuance and circulation of stablecoins will continue to expand going forward. He said, "Stablecoins are already handling value transfers on a considerable scale, and their use is expanding beyond virtual asset trading into payment and settlement and the real economy," adding, "This trend is difficult to reverse, and we have entered a stage where institutional responses must follow."
He also warned that as the use of stablecoins increases, the existing AML framework could run up against its limits. Kim explained, "By design, stablecoins can circulate without passing through the issuer’s system," adding, "As a result, even individuals who have not undergone direct know-your-customer (KYC) checks may end up holding stablecoins, and in such cases AML may fail during the redemption process."
As an AML approach to respond to the spread of stablecoins, he proposed 'AML supervision using AI.' Kim stressed, "With the siloed approach of traditional finance, it is difficult to cope with AML that is shifting into network-based crime," adding, "We need to be able to use AI to analyze the entire network."
Uk Jin
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