South Korea’s financial industry has strong belief that the country’s security token offerings (STO) market could reach an impressive $287 billion by 2030. With this estimation in mind, major commercial banks are now getting ready to participate in this growing market. In fact, the Hana Financial Group’s Management Research Institute has forecast that the domestic security token market will expand to almost $27 billion next year, experiencing rapid growth throughout the decade.
The banking sector is responding to recent policy announcements by the government regarding the regulations around STOs. With domestic coin issuance having been banned in early 2018, the government made a pledge last year to loosen the rules, particularly for STO projects. As a result, regulated financial firms will now be allowed to offer STO products with more freedom.
Industry insiders expect the entry of domestic financial companies into the market to accelerate rapidly. The South Korean government is keen to test the STO waters in a regulatory sandbox, where selected firms will have the opportunity to issue and distribute tokenized securities under the supervision of the Financial Services Commission (FSC).
Banks are anticipating a stronger green light and have created an STO alliance, co-founded by one of the country’s largest and crypto-friendly banks, Nonghyup (NH) Bank, along with Suhyup Bank and Jeonbuk Bank. The alliance’s membership doubled on June 15, with the addition of three major banks: the Industrial Bank of Korea, Shinhan Bank, and Woori Bank.
These banks foresee an explosion in STOs, with several tokenized projects such as real estate, artwork, and music copyrights set to debut. At least one tokenized music copyright firm has already joined the FSC’s sandbox. However, some sources suggest that banks may have to wait until 2025 before they can access the STO market due to regulatory delays.
Unnamed regulatory officials mentioned that the submission of the related legal amendment has been delayed a little. As a result, STO legalization could come into force by the end of next year at the earliest. Earlier this year, it was reported that major banking groups Shinhan and Kookmin had already started developing STO trading platforms.
While the future of South Korea’s STO market looks promising, it’s important to remain cautious about the regulatory environment and other potential challenges, as the market’s burgeoning growth may face hurdles along the way.
Source: Cryptonews
