Ruling Party Vows to Pass Legislation for Security Token Offerings

Attention is now on whether delayed legislation for security token offerings (STO) will gain traction, following comments from the ruling party leader who recently emphasized the need for regulatory improvements during his participation in a related meeting.

Attention is now on whether delayed legislation for security token offerings (STO) will gain traction, following comments from the ruling party leader who recently emphasized the need for regulatory improvements during his participation in a related meeting.

STO emerged as a new growth area for the securities and banking industries after financial authorities released related guidelines in February last year. However, the lack of legislative progress in the previous 21st National Assembly has delayed their integration into the institutional framework.

Han Dong-hoon, chairman of the ruling People Power Party (PPP), stated that the time for debating whether to allow tokenized securities has passed. He made the remark during a breakfast meeting at the National Assembly discussing the STO legislation, Thursday.

“We must thoroughly prepare and establish the system without delay to eliminate unfair trading and user inconveniences,” he said. “The United States and Singapore have already released STO guidelines, and Japan has incorporated STO into the institutional framework through amendments to its financial instruments and exchange act.”

The meeting was jointly hosted by Rep. Kim Jae-sub of the PPP, who had submitted a bill aiming to establish the legal foundation for security tokens and draw up measures for investor protection.

Kim said, “Although STO-related bills were introduced in the 21st Assembly, they were discarded. I have introduced the bill in the 22nd Assembly, and I will work diligently to ensure that legal preparations for STO are completed in this session.”

In February last year, the financial authorities officially announced that they would allow the issuance and distribution of tokenized securities.

The authorities said at the time that, unlike general virtual assets such as Bitcoin and Ethereum, tokenized securities are rearded as equity, even though they are issued in digital asset form. They emphasized that tokenized securities fall under the regulation of the Capital Market Act and promised their integration into the institutional framework.

In response, securities firms and banks have quickly established dedicated teams for STO and expanded their workforce. Many of them have also actively collaborated with blockchain companies to complete the infrastructure necessary for STO operations.

These firms have already invested tens of billions of won, but are now facing significant challenges, as the legislation for STO has yet to be realized despite the authorities’ announcement nearly two years ago. This highlights the urgent need for institutionalization.

“Securities firms have made significant preparations and investments. It is crucial that the STO bill is passed quickly and the legislation is implemented without delay,” Rye Ji-hae, a senior official at Mirae Asset Securities, said.