KEA Calls on South Korea to Pass Digital Asset Act for STO Growth

South Korea’s leading business lobby group, the Korea Economic Association (KEA), has formally urged the government to pass a comprehensive basic act on digital assets to support the expansion of Security Token Offerings (STOs). The recommendation was made during a joint meeting chaired by Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-cheol, as reported by Digital Asset.

Legislative Gaps and Delays

While amendments to the Electronic Securities Act and the Capital Markets Act are scheduled to take effect in January 2027 to facilitate STO introductions, the KEA warned that discussions on payment and settlement methods remain insufficient. Without a foundational legal framework for digital assets, the effectiveness of those sector-specific amendments could be undermined.

International Comparison and Stablecoin Role

The KEA pointed out that major economies such as the United States, Japan, and Germany have adopted stablecoins optimized for STOs as key settlement instruments. In contrast, South Korea’s legislative plans for stablecoins and broader digital asset payments have been postponed indefinitely, creating a competitive disadvantage for its capital markets and blockchain industry.

Why This Matters for Investors and the Market

A basic digital asset act would provide legal clarity for token issuers, exchanges, and investors, reducing regulatory uncertainty that currently hampers STO adoption. Without it, South Korean firms may struggle to compete globally in the emerging security token market, potentially losing business to jurisdictions with clearer rules.

Conclusion

The KEA’s call underscores a growing urgency within South Korea’s financial sector to establish a coherent digital asset regulatory framework. As the January 2027 deadline for STO-related amendments approaches, industry stakeholders are pushing for parallel progress on payment and settlement legislation to ensure the ecosystem can operate effectively.

FAQs

Q1: What is a Security Token Offering (STO)?
An STO is a type of public offering where tokenized digital securities, representing ownership in real-world assets like equity or real estate, are sold to investors. It is regulated similarly to traditional securities offerings.

Q2: Why does South Korea need a basic digital asset act?
A basic act would establish overarching legal principles for digital assets, including definitions, issuance rules, and settlement mechanisms. This would fill gaps left by sector-specific amendments and align South Korea with international standards.

Q3: How do stablecoins support STOs?
Stablecoins provide a stable medium of exchange for STO transactions, enabling efficient and predictable settlement. They are used in major markets like the U.S. and Japan to facilitate token trading and reduce volatility risks.