Korean financial authorities will allow the issuance and distribution of tokenized securities, which are digital tokens supported by blockchain technology that represents a stake in assets like real estate, artwork and music copyright.

Ownership sharing through security token offering, or STO, is currently available in Korea but only to a few trade platforms such as Music Cow and Casa Korea under temporary regulatory exemption.

The Financial Services Commission Sunday announced a guideline for STO that allows the issuance and distribution of digital securities incorporating blockchain technology. The commission plans to submit a bill to amend the current legislative provision for the introduction of STO to the National Assembly during the first half of the year before implementing it next year at the earliest.

The financial authorities plan to separate STO services into issuance and distribution, similar to the securities market, while providing a system to protect investors.

Under the guideline, not only atypical assets, such as artwork and music, but also existing securities such as stocks and bonds can be issued in the form of STO. This is worth keeping an eye on as it could have an impact on existing industries, said an official from a financial investment company.

STO issuers must meet the minimum equity capital, and if not, they must use a securities company for STO issuance.

By Kim Myung-hwan and Minu Kim

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