South Korea Finance Ministry Deems Token Stocks Securities

South Korea's finance ministry has determined that tokenized stocks should be classified as securities under existing law, a position that could subject them to immediate taxation without new legislation. The decision, reported on Friday, June 12, hinges on a final review by the nation's top financial regulator.

An official from the Ministry of Economy and Finance stated that while tokenized stocks may be issued as digital assets, their economic substance aligns with traditional securities. This interpretation means the products would fall under the Capital Markets Act for taxation purposes, rather than being treated as virtual assets. The ministry indicated this view has been shared by financial regulators previously.

The Financial Services Commission (FSC) is now the focal point, as it is expected to release revised guidelines and regulations concerning token securities in July. If the commission agrees with the ministry's classification, taxation could begin as early as the second half of this year. The FSC had previously announced in May that it would develop a roadmap for tokenizing conventional securities, including listed shares.

This regulatory clarification addresses a...