South Korea's Woori Bank and NH NongHyup Bank are independently developing tokenization platforms.
South Korea Embraces Digital Finance Revolution with Progress in Security Token Issuance
South Korea is making significant strides in the world of digital finance, focusing on the development and regulation of security token issuance platforms and tokenization consortia. This push aims to transform the financial landscape by integrating security tokens – digital representations of real-world assets – into the mainstream financial system.
The country is actively advancing Security Token Offering (STO) legislation, proposing comprehensive legal frameworks such as the Digital Asset Basic Act and the Token Securities Act. These measures are designed to formally integrate security tokens into the financial system by recognising blockchain/distributed ledger technology for record-keeping, updating the Electronic Securities Act and Capital Market Act, and enabling regulated issuance and trading of digital securities.
A key piece of legislation, the STO bill, is currently under active review and is expected to clarify and legalise security token issuance, custody, and trading. The bill also includes provisions for won-pegged stablecoins, reflecting a priority to develop a digital currency ecosystem supported by private sector issuance beyond the Bank of Korea’s direct control.
On the institutional and platform side, financial institutions and startups are quietly building infrastructure to prepare for regulatory changes in tokenized securities markets. Platforms for fractional investments and tokenized asset trading have so far operated under regulatory sandboxes but are poised to expand once the Token Securities Act passes.
BDACS, a regulated crypto custodian in Korea, recently launched institutional custody services for XRP, reflecting growing institutional integration with established crypto assets under strict compliance and partnerships with major exchanges like Upbit, Coinone, and Korbit.
KakaoBank, a leading South Korean digital bank, is actively exploring stablecoin issuance and custody services, spearheading private-sector stablecoin initiatives alongside regulatory compliance frameworks such as KYC and AML. This institutional engagement signals increased readiness and legitimacy for tokenization and digital asset platforms.
In summary, South Korea is pursuing a two-pronged approach: legislative modernisation to formally recognise and regulate security tokens and stablecoins, alongside the emergence of institutional custody and issuance platforms prepared to operationalise tokenized securities within a compliant framework.
This dynamic environment is expected to position Korea as a regional leader in blockchain-enabled digital finance innovation, bridging the traditional financial markets and the emerging digital asset economy.
Notable developments include NH NongHyup Bank's token issuance platform, which is expected to be ready by November this year. Institutions are forging ahead despite the delay in passing legislation to support security token issuance. The other new security token product offered by Woori Bank and Piece is related to shipping finance. Woori Bank has signed a distribution deal with Piece, a Korean fractional investment marketplace, to offer two new security token products.
Korea's banks and securities companies have started building token issuance platforms and collaborating on tokenization consortia. Ongoing collaborations among these entities include Woori Bank, Samsung Securities, and SK Securities, who entered into a mutual cooperation council to explore business models, verify infrastructure, and establish investment protection measures, which now appears to be for a joint token issuance solution.
Korea Investment & Securities is one of the entities developing its own DLT issuance solution. Woori Bank has applied to participate in a regulatory sandbox. Piece has agreements to promote security token offerings (STOs) with several brokerages, including NH Investment & Securities, KDB Infrastructure, Korea Investment & Securities, Shinhan Investment & Securities, and KB Securities.
The development of token issuance platforms continues among Korean institutions, despite the delay in passing legislation to support security token issuance. NH NongHyup Bank is preparing its token issuance platform regardless of the passage of amendments to the Electronic Securities Act and the Capital Markets Act. Multiple security token consortia exist in Korea, with some developing joint platforms and others being simple collaborations.
In conclusion, South Korea's progress in the realm of security token issuance and tokenization consortia is a testament to the country's commitment to digital finance innovation. The country's forward momentum in this area is expected to solidify its position as a regional leader in blockchain-enabled digital finance.
- The progress in South Korea's security token issuance and tokenization consortia, as depicted in the development of platforms like those by NH NongHyup Bank and Piece, offers valuable insights into the country's commitment to digital finance revolution.
- Recognizing the potential of technology in finance, South Korea is proposing and enacting legislation such as the Digital Asset Basic Act and the Token Securities Act to formally integrate security tokens into the mainstream financial system.
- The emergence of institutional players like BDACS, KakaoBank, and numerous banks and securities companies, who are building infrastructure and exploring stablecoin issuance and custody services, signifies the growing importance of tokenization and digital asset platforms in Korea's financial business landscape.
