The South Korean parliament could soon approve a draft tokenized securities bill, finally giving domestic firms the right to launch blockchain technology-powered coins tied to real estate, raw materials, livestock, and copyrighted works.
According to the South Korean news agency Yonhap, two bills that propose institutionalizing tokenized securities are pending before the National Assembly’s Political Affairs Committee.
Tokenized Securities: High on Political Agenda?
The bills were drafted by lawmakers Min Byeong-deok and Kim Jae-seop. The National Assembly has been effectively deadlocked since December last year, when former President Yuoon Seok-yeol unsuccessfully attempted to impose martial law.
But following yesterday’s inauguration of President Lee Jae-myung of the Democratic Party (DP), an end to the impasse is now in sight.
The DP has a large majority in parliament. Senior party officials have repeatedly called for Seoul to legalize security token offerings (STOs).
This would overturn a much-maligned blanket ban on all forms of public blockchain-based token issuances. The ban dates back to the end of the 2010s.
Yonhap wrote that expectations are now high that lawmakers will “quickly” turn their attention to STO regulations.
The news agency wrote that expectations about approval grew high in previous sessions. Many felt the committee was on the cusp of approving the bills.
The South Korean National Assembly Building in Seoul, South Korea. (Source: SC Jang)Both bills failed to pass the past session “due to external factors such as the National Assembly’s deadlock,” Yonhap wrote. The agency added, “However, the industry thinks that much has since changed.”
Firms Ready to Act
Scores of South Korean companies have been sitting on tokenized securities-related offerings for years, in anticipation of favorable legislation. This number includes large financial providers, telecom giants, and leading tech companies.
Former President Yoon repeatedly pledged to authorize STO approval, but was ultimately unable to deliver on his promises.
Domestic firms have told media outlets they are hopeful the same will not be true of President Lee’s government.
Lawmakers have reached a de facto consensus about the need to legalize STOs, and the nation’s biggest securities companies want Seoul to fast-track the necessary legislation.
Many providers say that this will help them diversify their financial investment product offerings. Yonhap explained:
“Both the ruling and opposition parties are, unusually, showing a strong desire to activate the STO market. A bipartisan consensus is emerging.”
Financial Inclusion Boost
Lawmakers believe STOs will help boost financial inclusion. They think STO will let the public make micro-investments, spending as little as 10,000 won ($7.39) to invest in real estate assets or expensive works of art.
However, while the media outlet suggested that politicians will likely push ahead with a vote on Min’s or Kim’s bills once business as usual resumes in the National Assembly, controversy surrounding the fate of Yoon continues to disrupt the chamber’s activities.
The DP wants to process several special prosecution laws as it looks to launch an inquiry into Yoon’s wife, Kim Keon-hee.
The latter has been accused of crimes including fraud, stock market manipulation, tax evasion, and corruption.
The opposition People Power Party has protested the DP’s moves. The former says a plenary session schedule has not yet been agreed upon.
President Lee also vowed to launch a KRW-pegged stablecoin in the run-up to June 3’s election. Both he and Min claimed that a won stablecoin could help South Korea “secure a sure position in the global battle for stablecoin hegemony.”
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