Meritz Securities Executive Urges Swift Token-Securities Rules, Warns of Capital Flight if Delayed

Kang Byung-ha, a managing director at Meritz Securities, urged South Korea to quickly establish a regulatory framework for the token-securities market, warning that delays could accelerate domestic capital outflows overseas and leave the country without a channel to attract foreign capital in line with global standards.

Speaking on November 12 at a seminar titled “Digital Assets: The Institutional Era Arrives” at the National Assembly Members’ Office Building in Seoul’s Yeouido district, Kang presented on “Global Digital Asset Market Trends and Institutional Developments at Home and Abroad.” He said that if the rollout of tokenized securities lags, South Korean capital may flow out while channels for overseas capital to enter remain underdeveloped.

Kang said the digital-asset market is moving beyond an initial phase led by cryptocurrency exchanges and retail investors into a second phase driven by financial institutions and corporations, including banks and securities firms. He added that a market centered on Bitcoin and altcoins is set to broaden into tokenized securities, real-world assets, or RWA, and stablecoins.

He emphasized that tokenized securities could become a tool to improve the global accessibility of South Korea’s capital markets. Rather than raising capital for domestic stocks and bonds only within the country, tokenization could create a cross-border gateway for funds from overseas to flow in.

Kang also said domestic financial institutions face significant regulatory constraints as they prepare related businesses. Under the current environment, even small-scale test transactions are difficult to conduct regardless of amount. He said financial companies should be allowed preliminary trials and preparation time so they can safely offer new products.

On overseas regulatory models, Kang said South Korea should pay attention not only to the US framework but also to Hong Kong’s efforts to formalize the sector. He said Korea can refer to US regulations, while also studying Hong Kong’s examples of digital-bond issuance and financial-infrastructure development to support gradual innovation by domestic financial firms.

Kang also identified investor protection in tokenized equities as a key issue. He said investors’ rights can vary depending on whether a token simply tracks the price of an underlying share or also guarantees rights such as voting power and dividends. If tokens are issued without securing the underlying shares, investors could suffer losses if the issuer becomes insolvent. He said issuance should be limited to qualified operators and accompanied by clear disclosure of legal rights.

“Excessively strict regulation can instead push consumers toward offshore channels,” Kang said. “We need to create an environment where consumers can invest safely within an appropriate regulatory framework.” He added that South Korea should overhaul digital-asset rules and support financial-infrastructure development so domestic financial companies do not fall behind in global competition.