South Korea has taken two major, interconnected steps to formalize its digital asset regulatory landscape. First, the National Assembly has passed amendments to the Electronic Securities Act and Capital Markets Act, creating a legal framework for tokenized securities. This move, finalized in mid-January after a previous attempt failed in 2023, formally recognizes blockchain-based issuance and tokenized assets within the existing financial system.
The amendments are designed to elevate tokenized securities from experimental pilots to regulated instruments encompassing debt, equity, and investment contracts, said Sean Lee, Senior APAC Advisor at Crypto Council for Innovation. The legislation separates the issuance and distribution of tokenized assets, requiring licensed securities companies to handle issuance with regulatory approval, while blockchain and fintech firms act as technology enablers.
Concurrently, the Democratic Party of Korea's Digital Asset Task Force is finalizing a comprehensive Digital Assets Act, consolidating five separate bills into a unified legislative proposal to be submitted this week. This second phase of regulatory development aims to establish clear legal frameworks for the broader cryptocurrency sector.
A key point of tension in the new Act is a proposal from the Financial Services Commission (FSC) to limit major shareholders' stakes in digital asset exchanges to 15-20%, mirroring rules for traditional Alternative Trading Systems. Industry stakeholders and task force members strongly oppose this, arguing it could hinder exchange competitiveness, innovation, and investment in security infrastructure.
The tokenization market is poised for significant growth. Boston Consulting Group projects tokenized securities could grow from $80 billion today to approximately $250 billion by 2030. South Korean firms are actively preparing: Hanwha Investment and Securities aims to become a digital asset-specializing firm and plans a KRW 10 billion ($7 million) investment in digital asset platform Xangle. Mirae Asset Group plans to bring about KRW 120 trillion ($82 billion) in client assets on-chain.
Despite the regulatory clarity, the STO market is expected to scale slowly. South Korea has provisionally set January 2027 for full-scale market operation, leaving 12 months to establish investor protection rules and a blockchain-based account management system. Regulators, wary of assets backed by illiquid holdings, will initially likely focus on assets with predictable returns like real estate-backed securities.
