Experts Discuss Korean Security Token Market
Since the Korean financial regulator released regulatory guidelines on security tokens in February, many have anticipated that the introduction of security tokens would transform the concept of investment and give rise to new market strategies based on blockchain technology.
Industry professionals have expressed their opinions on the matter in interviews with media outlets.
Token issuance and distribution
Park Hyo-jin, vice president at Sejong Telecom, in a recent interview with Korean media outlet Digital Today, expressed his disappointment about the Korean government’s decision to separate token issuance from token distribution. Sejong Telecom is the developer and operator of the blockchain-based real estate fractional investment platform Bbric.
According to Park, the capital market law separates token issuance from token distribution in order to prevent conflicts of interest, as interested parties may attempt to control financial products according to their own preferences. However, things are different with security tokens, Park believes. With the help of blockchain technology, a mainnet can issue and distribute tokens without intermediaries.
Higher investment limits
Park emphasized the importance of increasing investment limits and cited the small size of the Korea New Exchange (KONEX), a stock exchange for small enterprises, as a reason for its lack of activity. He added that higher caps would result in positive ripple effects.
Regarding real estate security tokens, Park doesn’t expect more profitable products, but sees that more investment choices will be available. He is particularly interested in investment contract securities. One such example is renting a piece of land to farmers to distribute harvest profits.
Connection with virtual assets
The security token market will face limitations if it’s not connected with its virtual asset counterpart. He mentioned the need for a digital asset law to create an ecosystem that links security tokens with virtual assets.
Meanwhile, in an interview with Economic Review, Lee Kun-ho, former CEO of KB Kookmin Bank, showed a somewhat pessimistic view about the Korean security token market while admitting its potential.
Various uncertainties
In his opinion, while real estate holds potential as a security token investment, government policies may introduce uncertainties. Likewise, the markets for music and artwork are also subject to unpredictability. Consequently, security token strategies in these areas could encounter limitations.
Lee also sees that some of the services don’t necessitate blockchain technology. It is unlikely that any clear winners will emerge in the short term; therefore, it is vital for the industry to approach this issue with prudence, he added.
