South Korea Classifies Tokenized Stocks as Securities

South Korea's Ministry of Economy and Finance regards tokenized stocks as securities rather than virtual assets, a legal view that could bring them under the country's existing tax and disclosure rules if the Financial Services Commission adopts the same interpretation.

Tokenized stocks are created when a custodian holds conventional shares and issues digital tokens on a blockchain that represent the economic rights tied to those shares. These tokens can convey rights to dividends and capital gains and allow trading outside normal market hours.

The Financial Services Commission's 2023 Token Securities Guidelines already state that token securities issued in digital form fall under the Capital Markets Act. The FSC plans to propose amendments to those guidelines and related rules in July. If the FSC adopts the ministry's interpretation in those revisions, the Capital Markets Act would provide the legal basis to tax tokenized stocks beginning in the second half of 2026.

A ministry official described tokenized stocks as “substantially closer to securities” despite their digital form, and noted that financial regulators had previously reached similar conclusions in discussions with the ministry.

Under the ministry's view, tokenized equities would be subject to the same tax reporting and disclosure obligations that apply to conventional securities. Transaction records and gains tied to tokenized stocks could therefore be reported and taxed under existing law rather than under a separate virtual asset tax framework scheduled to take effect next year.

The ministry indicated that tokenized stocks traded on overseas platforms could also fall within Korea's tax scope if their underlying economic rights are judged to qualify as securities under domestic law.

Market data show the tokenized equities category has grown, reaching roughly $5.5 billion in market capitalization and ranking among the larger real-world asset classes. Supporters of tokenized stocks highlight features such as near-continuous trading and access to fractional ownership. Regulators have focused on investor protection, custody arrangements and how existing securities rules apply to tokenized structures.

If regulators finalize guidance treating tokenized stocks as securities, issuers, custodians and trading platforms would need to comply with securities disclosure, custody and tax reporting requirements under the Capital Markets Act. The FSC's July rulemaking will determine whether the ministry's classification is formally adopted and when related tax and regulatory obligations take effect.