South Korea's Ministry of Economy and Finance views tokenized stocks as securities rather than virtual assets, a position that could bring the products under the country's existing tax framework if the Financial Services Commission reaches the same legal interpretation.
Local news outlet Bloomingbit reported on Friday that a ministry official stated that the ministry currently classifies tokenized stocks as securities under existing legislation. "Although tokenized stocks formally take the form of virtual assets, they are substantially closer to securities," the official said, noting that financial regulators previously shared this classification with the ministry on multiple occasions.
Tokenized stocks are instruments where actual equities are held in custody by a custodian, and the corresponding economic rights are issued and distributed as digital tokens on a blockchain system, allowing capital gains exposure alongside 24/7 transactions.
The report suggests a potentially significant shift for Korean investors, many of which had assumed tokenized stocks would remain effectively untaxed until the country's virtual asset tax regime takes effect next year.
The Financial Services Commission's 2023 Token Securities Guidelines also state that token securities issued in the form of digital assets are subject to the Capital Markets Act, although the specific legal treatment of tokenized conventional equities has remained unresolved.
