STOs emerge as key engine for pushing Kosdaq toward 3,000 level

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Security tokens are emerging as a key engine to push the Kosdaq past the 3,000-point milestone following the realization of President Lee Jae Myung’s campaign pledge to lift the KOSPI above 5,000 points, according to National Assembly and industry officials on Tuesday.

The government and the ruling Democratic Party of Korea (DPK) are reviewing measures to foster corporate finance-oriented security token offerings (STOs) as a way to expand capital-raising options for small and venture firms.

STOs incorporate fractional investment — which allows shared ownership and profit rights in real-world assets such as real estate and art — into the formal financial system through blockchain-based infrastructure.

With the legal groundwork for STOs finalized last month, industry participants broadly agree that the focus must now shift from legislation to the construction of practical market infrastructure.

On Jan. 15, the National Assembly passed amendments to the Capital Markets Act and the Electronic Securities Act aimed at institutionalizing tokenized securities, without major disputes between the ruling and opposition parties.

Through the amendments, distributed ledger technology gained explicit legal recognition, paving the way for tokenization and over-the-counter trading of a wide range of real-world assets within the regulatory framework starting in January 2027.

The DPK’s special committee on KOSPI 5,000 has reportedly outlined plans to enhance the structural competitiveness of the Kosdaq market through STOs during a recent luncheon meeting with the president. The committee stressed that STOs could function as a new fundraising channel for small and venture companies, beyond their current role in fractional investment.

“A range of proposals was discussed on how STOs could help advance the goal of lifting the Kosdaq toward the 3,000 level,” a DPK official said.

According to party insiders, the core scenario envisions unlisted startups raising growth capital through STOs before eventually transitioning to a Kosdaq initial public offering. Other ideas included improving liquidity by tokenizing assets such as real estate or intellectual property held by Kosdaq-listed companies.

The Financial Services Commission (FSC) has also signaled plans to accelerate the rollout and pilot testing of blockchain-based securities infrastructure. In a recent work report to the president, the country’s top financial regulator said it aims to firmly position STOs as a viable fundraising tool for early-stage startups and innovative firms.

To that end, the FSC is focusing on building detailed frameworks, including disclosure requirements and investor protection mechanisms, to ensure transaction safety and market credibility.

Globally, the STO ecosystem is advancing at a faster pace. The New York Stock Exchange is developing a blockchain-powered platform that would enable 24-hour trading of tokenized equities and exchange-traded funds, along with near-instant settlement using stablecoins and other digital assets.

In contrast, Korea faces concerns that it could lose momentum despite having established the legal foundation for STOs. Progress on key infrastructure, including preliminary approvals for over-the-counter trading platforms for security tokens, has stalled amid debates over fairness, raising fears that the country may miss a critical window of opportunity.

“Korea has cleared the biggest hurdle by legalizing STOs, but the race now is about execution and speed,” an official from the financial investment industry said. “What matters is activating circulation infrastructure that allows real capital to flow and creating products that can meaningfully connect growth funding with small and venture companies.”

The Kosdaq closed at 1,144.33 on Tuesday, up 45.97 points, or 4.19 percent.