Korea to host $2 trillion STOs market

    Chain Partners’ CP Research and Coinone Research Center, have identified Security Token Offerings as a crucial innovation for the broader financial industry.

    The researchers posit that 2019 will see the establishment of the full-stack STO infrastructure, compelling industry growth to an estimated $2 trillion by 2030. The research noted that real estate and venture capital funds have already become tokenized but adoption may still be hindered in South Korea due to its current regulatory stance. According to the report, regulators hold different considerations for cryptocurrencies and blockchain, potentially leading to regulatory uncertainty. 

    STO infrastructure is already building strength for 2019 with the market estimated to grow to $2 trillion by 2030, according to CP Research, which also noted an early trend in the tokenization of venture capital funds and real estate. 

    South Korean regulators are expected to follow this evolution toward a regulatory compliant token regime, despite skepticism of new financial products. The country’s own scars engrained by mortgage-backed securities during the financial crisis of 2008 creates an impetus to carefully study financial innovations before roll out. 

 

    Indeed, South Korean regulators will have to be convinced that STOs and their implications on real assets are well worth the risk.

    “One of the strengths of security-type tokens is that they enhance protection over investors as profits, voting rights, and shares become under investors’ possession,” commented Elena Kang, head of Huobi Korea’s Operations Headquarters.

    “It is difficult to apply STO in South Korea at the moment as there is no clear stance from South Korean government towards ICO and there is no clear regulation on cryptocurrency.”

    Kang further emphasized that it is necessary to inspect whether STO corresponds to a financial investment product under the Capital Market Act. Although there is a possibility that a security token can be categorized as an investment contract security under current laws, legal risks in South Korea remain as a clear regulatory stance has yet to be established.

Author

Andrew Rosenbaum

Andrew Rosenbaum

Andrew Rosenbaum has been a financial journalist and writer for 15 years.

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