Tokenized asset investment products set to launch in Korea this month

[Image source: Gettyimagesbank]

South Korea is poised to witness the launch of tokenized asset investment products, allowing investors to buy and sell assets such as artworks, music royalties, and real estate in fractional amounts similar to securities. This anticipated launch is scheduled for later this month as the Financial Supervisory Service (FSS) said on Tuesday that several of the five tokenized asset investment companies are expected to submit securities registration statements as early as August.

The five companies include one Korean cow investment firm, Bancow of Stockeeper, and four art investment firms - Tessa, SOTWO of Seoul Auction Blue, Art Together of Together Art, and ArtNGuide of Yeolmae Company.

Previously, a debate had arisen regarding whether the investment products offered by these companies should be classified as securities or not. However, financial authorities decided on July 12 to grant sanction exemptions to the five tokenized asset investment operators whose securities nature has been recognized.

The FSS recently revised the format of securities registration statements to enhance investor protection and business convenience. The revised format includes provisions to legally isolate investors’ rights and assets from the risk of insolvency by the operators, ensuring a safer environment for investors.

The FSS also decided to operate a dedicated examination team to strictly manage the issuance structure of investment contract securities and investor protection systems.

While emphasizing the lack of prior cases to predict the types of potential investor risks, the FSS urged caution in making investments. The issue of liquidity in investment products is also a concern since a public exchange, similar to the Korea Exchange for traditional financial products, does not currently exist.

The FSS plans to hold an explanatory session on Aug. 10, targeting companies planning to issue tokenized asset investment products, to provide information about the revised format and future examination procedures.