South Korea's central bank, regulators call for regulation of tokenized securities
Date: 2024-08-29 Author: Henry Casey Categories: IN WORLD
According to ET News, representatives of the central bank, regulators, and the securities industry called for action on tokenized securities at the Korea Securities Association (KSA) summit on August 27.
Regulation of tokenized securities: Is Seoul ready for action?
The association said that "digital assets" represent the "future direction" of the financial market.
Speakers at the event stressed that Seoul should take steps including "legalization of tokenized securities."
Yoon Sung-guan, director of digital currency policy at the Bank of Korea (BOK), said:
"As we move toward a digital economy, we must simultaneously tokenize digital assets and payment methods."
Yoon noted that the central bank will likely play a key role in this process, as it will “provide final settlement assets” that will “support secure transactions of digital assets.”
Lee Joon-seo, chairman of the KSA, said that since “digital assets” will play such an important role in financial markets, “more detailed legislation” is now “inevitable.”
He warned that the absence of such legislation will increase “financial market instability” and cause “consumer protection issues.”
Lee recalled that a bill on STOs is pending in the National Assembly, but called on Seoul to “systematically reorganize” the financial sector’s issuance and distribution infrastructure to create space for STOs.
This, he said, will help STOs become “a new engine of economic growth.”
“The world’s advanced economies are engaged in fierce competition. They are seeking to use blockchain technology to lead the innovation of financial infrastructure and the digital asset market. South Korea cannot afford to be left behind in this trend. We need to urgently pass legislation related to tokenized securities.”
“Urgent need” for STO regulation
Industry leaders agreed. Ryu Ji-hye, CEO of South Korean securities giant Mirae Asset, said:
“If the tokenized securities system is included in the legal framework, the industry will be able to develop various underlying assets and innovative financial products.”
Ryu noted that legal recognition of distributed ledgers could be “the first step towards blockchain becoming a key component of the financial industry.”
Participants in the subsequent panel discussion also agreed that Seoul needs to pass “appropriate laws” for the STO industry.
They also called for the government to support companies entering the virtual asset market.
Companies ‘in line’ to launch tokenized security products
Some argue that access to STO markets should be simplified not only for fintechs and securities providers, but also for “general” South Korean companies.
It was previously reported that “several” South Korean companies have already prepared STO platforms pending government approval.
Banks and other market participants believe that the country’s STO market will reach $287 billion by 2030. Analysts report that the country’s largest commercial banks are “lining up” to enter the market.
Experts believe that global regulators may also take notice of STO markets.
Kevin Murko, CEO and founder of CoinMetro, told Cryptonews.com:
“Tokenization of already dematerialized markets such as stocks can streamline settlements by reducing time factors and therefore reducing the associated costs.”
But Murko believes that the global tokenization process will eventually extend beyond the securities market.
He says the process will eventually include “historically illiquid markets,” including art and gemstones.
“The broad tokenization of real assets has the potential to create much more exciting change. Tokenization of these types of assets opens up liquidity, making it easier to find, fund, and exit investment options in historically illiquid markets.”
