When the Agricultural Cooperative Bank of Korea transformed its cross-border tax refund system using blockchain technology, the government included virtual assets in the real estate transaction review list—this fourth-largest economy in East Asia is reshaping its future path of asset tokenization amid the tug-of-war between regulation and innovation in digital finance.

In the second half of 2025, two parallel trends emerged in Korea's financial sector. On one hand, NH Agricultural Cooperative Bank, one of Korea's five largest banks, announced the launch of a stablecoin technology test aimed at simplifying the VAT refund process for inbound tourists through blockchain technology.

On the other hand, the Korean government revised real estate transaction regulations, stipulating that funds sourced from virtual assets must be declared when purchasing real estate. These seemingly contradictory developments actually reflect Korea's dual-track strategy in the digital asset field: to prevent risks while not wanting to miss out on innovation opportunities.

1. The Global RWA Wave and Korea's Cautious Steps

The global asset tokenization market is experiencing explosive growth. According to the "Outlook on Tokenized Financial Systems" report published by the Korea Capital Market Institute in September 2025, the global tokenization market size skyrocketed from $7.87 billion in the third quarter of 2023 to $32.27 billion in the same period of 2025, growing 4.1 times in just two years.

This growth is primarily driven by traditional financial assets such as bonds and stocks, with bond sizes increasing 13.6 times and stocks soaring 351.9 times.

The tokenization of national bonds has become a new frontier in global financial competition. The Bank for International Settlements, in its "Interoperability Guidelines for Tokenized Financial Markets" published in October 2025, identified government bond tokens alongside wholesale central bank digital currencies and deposit tokens as the "foundation of the tokenized financial system."

Hong Kong and Europe have adopted a "direct issuance" model, with Hong Kong successfully issuing green government bond tokens in 2023 and 2024. In contrast, the United States is led by the private sector, with asset management companies like BlackRock and Franklin Templeton tokenizing money market funds.

Korea has maintained a cautious attitude in this competition. Unlike Japan, which emphasizes market self-discipline, and Hong Kong, which actively promotes bond tokenization, Korea's regulatory culture is more administratively driven. Korea has not yet directly launched large-scale RWA national bond projects, with policy focus still on building a "virtual asset management" and "stablecoin compliance framework," which are seen as necessary groundwork for future asset tokenization systems.

Senior researcher Kim Seong-soo from the Korea Financial Research Institute pointed out, "The Korean policy community generally believes that RWA can only expand rapidly within clear compliance boundaries once the virtual asset regulatory framework is stable." This cautious attitude reflects Korea's high regard for financial stability and lays the institutional foundation for the healthy development of the future RWA market.

2. Regulatory Evolution: From Total Ban to Gradual Opening

Korea's defensive regulatory system is not a momentary conservatism but a product of historical risk accumulation. Since the ICO bubble and exchange money laundering incidents in 2017, Korea's financial regulatory system has strengthened the tradition of "preventive legislation." Therefore, before entering the RWA phase, Korea places greater emphasis on institutional controllability and transparency verification.

In 2017, the Korean government enacted regulations that, in principle, prohibited corporate entities from engaging in virtual asset transactions. At that time, the government was concerned that corporate virtual asset trading could pose significant money laundering and market overheating threats, leading to the decision to ban corporate virtual asset trading to alleviate the highly speculative market situation.

The implementation of the "Virtual Asset User Protection Act" became an important turning point. With the law taking effect on July 19, 2024, a legislative foundation for user protection was established. At the same time, the market environment changed, with major countries worldwide widely accepting corporate virtual asset trading, and domestic companies increasingly seeking new blockchain-related business opportunities.

The Financial Services Commission of Korea has developed a phased roadmap for corporate participation in the virtual asset market. According to this roadmap, in the first half of 2025, the purpose of corporate entities opening real-name verified accounts is limited to selling virtual assets and converting them into cash. Law enforcement agencies with the legal authority to confiscate criminal proceeds, such as the Prosecutor's Office, National Tax Service, and Customs Service, have been able to open real-name accounts since the end of 2024.

These phased openings are not due to "relaxed regulation" but rather a strengthening of market transparency and traceability mechanisms. From allowing law enforcement agencies to hold accounts to involving non-profit organizations, Korea is gradually validating the controllability of market participation risks through incremental openings.

An anonymous official from the Financial Services Commission revealed, "Our strategy is to gradually improve the regulatory framework through controllable forms of participation, accumulating experience for more complex asset tokenization scenarios in the future." This incremental opening strategy essentially builds a reliable institutional infrastructure for the large-scale application of RWA.

3. Market Practice: From Concept Validation to Regulatory Sandbox

Korean internet companies are actively laying out digital asset infrastructure. Kakao Enterprise, the IT platform operator of Korean internet giant Kakao, announced a collaboration with Klay Ape Club to jointly develop an NFT and metaverse platform. The company plans to create a dedicated cloud platform for enterprises based on "Kakao iCloud," providing it in a PaaS format, allowing companies to easily create and issue NFTs.

Commercial banks play a key role in stablecoin testing. NH Agricultural Cooperative Bank's stablecoin testing project aims to simplify the cross-border tax refund process through blockchain automation. The bank's Executive Vice President Choi Woon-jae stated that the stablecoin-based model "demonstrates how blockchain can effectively improve customer experience and enhance national competitiveness."

These experiments are not RWA themselves but rather explorations of the regulatory sandbox—testing the feasibility of blockchain in value confirmation and cross-border settlement through controllable scenarios. Although these stablecoin tests are not directly related to RWA, they provide technical and regulatory pre-experience for the future settlement layer of asset tokenization.

The scale of stablecoin trading in Korea has become quite substantial. According to a report by the Korea Economic Daily in October 2025, citing statistics from Upbit exchange, the domestic stablecoin trading volume in Korea has exceeded $41 billion. This data indicates that even before a clear regulatory framework is established, the demand for stablecoins in the Korean market is already thriving.

4. Compliance Refinement: The Regulatory Bridge from Virtual Assets to RWA

Non-profit organizations selling virtual assets face new regulations. Starting from June 2025, the Financial Services Commission of Korea implemented new regulations allowing non-profit organizations and virtual asset exchanges to legally sell their digital assets. This regulatory framework requires institutions to implement internal review mechanisms and strengthen anti-money laundering procedures to ensure compliance.

According to the new guidelines, non-profit organizations accepting cryptocurrency donations must immediately convert these digital assets into fiat currency. These transactions are limited to mainstream cryptocurrencies available on Korean won-based exchanges to comply with stricter oversight measures.

The listing standards for virtual assets are becoming stricter. Starting June 1, additional market protection measures came into effect. Newly listed digital assets must maintain a minimum circulation volume, and market price orders will face restrictions during the initial listing phase. These regulations specifically target preventing "pump and dump" schemes and speculation on potentially market-disrupting zombie and meme tokens.

Although these review mechanisms target crypto assets, they also provide a regulatory template for future RWA token listings. The establishment of these compliance mechanisms will serve as a bridge for the institutionalization of RWA in Korea, rather than an endpoint.

Real estate is the core area of Korea's anti-money laundering regulation. By incorporating virtual assets into the declaration system, the government essentially integrates the flow of digital asset funds into the traditional financial regulatory framework, creating cross-sectional transparency. The strengthening of virtual asset regulation in real estate transactions now requires the declaration of funds sourced from virtual assets when purchasing real estate.

Buyers using cryptocurrency-derived funds for property purchases will need to submit supporting documents for these transactions, thereby creating a clear audit trail between digital asset sales and real estate investments. This mechanism demonstrates how Korea applies traditional financial regulatory experience to the emerging digital asset field, laying the groundwork for more complex RWA compliance scenarios.

5. Development Challenges: Legislative Delays and Strategic Choices

However, the refined regulatory framework does not mean the market is unimpeded. Korea still faces dual challenges of legislative delays and regulatory balance at the institutional level.

Legislative delays are a major obstacle to the development of RWA in Korea. Legislation for security tokens has been delayed for two years, causing Korea to lag behind in the "token finance" trend. Researchers at the Korea Capital Market Institute emphasize that Korea urgently needs to establish its own national bond token roadmap to respond to this competition concerning future financial infrastructure.

Concerns over monetary sovereignty drive stablecoin regulation. Korea currently lacks a dedicated stablecoin regulatory framework. At this stage, stablecoins are included in the general definition of "virtual assets" under the "Virtual Asset User Protection Act." This regulatory gap has raised concerns in Korea about monetary sovereignty and capital outflow.

Policymakers worry that foreign stablecoins could threaten Korea's monetary sovereignty and lead to capital outflow and reliance on foreign stablecoins for trade settlement, thus triggering regulatory arbitrage issues.

Korea has adopted a dual-track strategy of "defense" and "offense." The defensive approach targets the speculative risks of virtual assets, while the offensive approach focuses on institutional tokenization and stablecoin systems. While strictly regulating virtual assets, Korea is actively building a state-led digital currency system.

In 2025, the Bank of Korea slowed down its CBDC development, pausing the originally planned pilot at the end of 2025 and instead supporting a "bank-first" stablecoin model.

Unlike Japan, which emphasizes market self-discipline, Korea's regulatory culture is more administratively driven, and this institutional path has constrained the speed of innovation. Intensified regional competition has prompted Korea to accelerate its pace—Japanese companies are establishing digital asset reserves, Hong Kong has issued comprehensive stablecoin regulations, and Singapore's number of crypto exchange licenses is set to double in 2024.

To address these challenges, Korea is adopting a dual-track approach: allowing non-bank stablecoin experiments within a regulatory sandbox while promoting institution-led stablecoins by commercial banks.

6. Future Path: Technological Neutrality and Global Coordination

If the past five years were the foundation period for defensive regulation, the next three years will be a race for technological interoperability and regulatory neutrality.

The RWA market in Korea holds immense potential. A research report from China Galaxy Securities classifies Korea as having an "innovation-oriented" regulatory approach, alongside Singapore and the UAE, seen as representatives focusing on regulatory sandboxes, optimized access mechanisms, and tax-friendly environments. This regulatory approach achieves a dynamic balance between compliance safety and incentive mechanisms, lowering pilot thresholds while maintaining financial stability and institutional trust.

Regulatory consistency and global standard coordination are crucial. According to a report by the Korea Economic News in March 2025, Kim Soyoung, Vice Chairman of the Financial Services Commission, emphasized in a meeting with the virtual asset industry and related experts that the progress of establishing virtual asset regulation domestically must ensure consistency with global regulatory standards.

This statement echoes the "Interoperability Guidelines for Tokenized Financial Markets" released by the Bank for International Settlements in October 2025, emphasizing that regulatory standards in various countries need to align with cross-border settlement and AML systems.

Technological neutrality and interoperability will be core to the future. Korea's hybrid structure may become an experimental model for the Asia region, aiming to achieve regulatory visibility and cross-institutional data sharing through public chain validation and private infrastructure collaboration. Korea is attempting to ensure technological neutrality and interoperability between public chains and private infrastructures, connecting the traditional financial system with grassroots innovation.

In the coming years, Korea may become one of the first countries to realize the issuance of joint stablecoins by major commercial banks. These bank-issued stablecoins will serve institutional use cases requiring wholesale settlement and regulatory trust, while non-bank stablecoins will be optimized for retail economies and the Web3 ecosystem, forming a parallel structure.

In Korea, the future of RWA is not a single technological leap but a reshaping of regulatory order. From NH Agricultural Cooperative Bank's stablecoin testing to the Financial Services Commission's phased roadmap for corporate participation in the virtual asset market, Korea is seeking a balance between strict control and experimentation.

The global RWA market competition has just begun. For Korea, regulation is not a constraint but a strategic self-restraint—finding gaps for innovation within order may be its unique way into the tokenization era. Whether Korea can find the right balance between defense and offense, regulation and innovation will determine its position in this competition concerning the future financial landscape.

Sources of some materials:

• "From 'Plugging Leaks' to 'Guiding': The Korean Government's Digital Asset Governance Philosophy and Financial Sovereignty Struggle"
• "Korean Internet Giant Kakao's Subsidiary to Build NFT Issuance Platform for Enterprises"
• "Korea Incorporates Virtual Assets into Real Estate Regulation: Impact on Transaction Transparency"
• "Korea Aims to Challenge Dollar Stablecoins through Blockchain-Driven VAT Refunds"

Author: Liang Yu Editor: Zhao Yidan

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