Lee Hyo-jin covers the Bank of Korea, the banking industry and broader financial news. Her previous beats include foreign affairs, North Korea and general reporting on Korean society.
BREAKING Gov't seeks infrastructure to tokenize traditional securities beyond fractional investments
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By Lee Hyo-jin
The government plans to build infrastructure to tokenize traditional securities such as stocks, bonds and funds, expanding security token offerings (STOs) beyond fractional investment products, as the system is set to launch next February.
The Financial Services Commission and the Financial Supervisory Service unveiled the policy direction, Friday.
Tokenized securities are digital representations of securities issued and traded through blockchain-based distributed ledger technology. The term is frequently confused with fractional investing, but it actually describes the method used to issue a security, rather than a distinct category of investment.
The technology can thus be applied far beyond fractional investment products, allowing conventional securities such as stocks, bonds and funds to be issued and traded in tokenized form using distributed ledger systems.
The country's tokenization plan will be rolled out in three phases, with the first phase covering privately placed money market funds and corporate bonds for institutional investors, unlisted stocks and publicly offered fractional investment securities.
The timing of the second and third phases will remain flexible, the regulators said, depending on the stability and efficiency of the first phase and the enactment of legislation on stablecoins.