South Korea Urged to Act on Tokenized Securities Regulation

South Korean industry leaders and central bank executives are pushing for swift government action to regulate tokenized securities.

At the Korea Securities Association (KSA) summit on August 27, officials highlighted the importance of legalizing Security Token Offerings (STOs) to align with the digital financial future.

Regulatory support from the central bank and large Korean securities companies

Yoon Seong-kwan, Director of Digital Currency Policy at the Bank of Korea (BOK), emphasized the necessity of tokenizing digital assets and payment methods.

He noted that the central bank would likely play a crucial role by providing settlement assets to ensure secure digital transactions.

“As we transition to a digital economy, we must simultaneously carry out the tokenization of digital assets and payment methods.”

KSA Chairman Lee Jun-seo warned that delays in legislation could destabilize financial markets and harm consumer protection. He urged the government to streamline the financial sector’s infrastructure to accommodate STOs, positioning them as a driver of economic growth.

“Advanced economies around the world are locked in a fierce competition. They want to use blockchain technology to lead financial infrastructure innovation and the digital asset market. South Korea cannot afford to fall behind in this trend. We must urgently roll out tokenized securities-related legislation.”

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The securities industry echoed the urgency for regulation. Ryu Ji-hae of Mirae Asset, a major South Korean securities firm, stressed that legal frameworks would enable the development of innovative financial products and establish blockchain as a key component of finance.

“If the token securities system is brought within the framework of the law, the industry will be able to develop various underlying assets and innovative financial products.”

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The financial industry is ready to enter the STO market

South Korean companies, including leading commercial banks, are reportedly ready to enter the STO market, anticipating it could be worth $287 billion by 2030. However, they await the necessary government approval to launch their platforms.

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Kevin Murcko, CEO of CoinMetro, believes the global push for tokenization will extend beyond securities, impacting traditionally illiquid markets like art and gems. This broader tokenization could open up new opportunities and liquidity in these areas.

“The broader tokenization of Real World Assets has the potential to create far more exciting changes. Tokenizing these asset types opens up liquidity, making it easier to source, fund, and exit investment options in historically illiquid markets.”