Author: Zhang Feng
On January 15, 2026, the National Assembly of South Korea passed the amendments to the "Electronic Registration Act" and the "Financial Investment Services and Capital Markets Act" (FSCMA), marking the official legal recognition of security tokens in South Korea and opening a compliant pathway for asset tokenization (RWA) business. This legislative action not only reshapes the digital landscape of South Korea's financial market but also creates a regional competition and collaboration dynamic with the regulatory practices in Hong Kong, providing a dual-track reference for the development of asset tokenization in East Asia.
I. Analysis of the Core Content of South Korea's Dual Bill Amendments
The recent amendments in South Korea do not establish a parallel regulatory system specifically for security tokens, but rather integrate them into the existing capital market framework through the revision of two core laws, achieving "compliance expansion" rather than "institutional reconstruction." This path choice ensures the stability of legal connections while reserving space for the application of blockchain technology in the securities field, with the core revisions focusing on three major dimensions.
(A) The Electronic Registration Act Establishes the Legal Status of Distributed Ledger
The most critical breakthrough in the revised Electronic Registration Act is the explicit recognition of distributed ledgers as the legal qualification for securities registries, allowing for the first time the native issuance of securities in tokenized form from an institutional perspective, rather than the traditional electronic securities "chain mapping." Previously, securities registration in South Korea could only be completed through the centralized Korea Securities Depository (KSD), with blockchain technology serving merely as an auxiliary recording tool; after the new regulations are implemented, issuers can legally declare to the KSD and directly issue security tokens based on blockchain, achieving a dual structure of "on-chain direct issuance + compliant registration."
This transformation not only activates the application scenarios of smart contracts in securities trading but also promotes an upgrade in account management models. The bill introduces a "issuer account management institution" system, serving as a buffer node between on-chain transactions and the regulatory system, responsible for aggregating fragmented on-chain data, fulfilling KYC/AML obligations, and connecting to the central registration system, thereby ensuring transaction efficiency while strengthening risk prevention measures. The tamper-proof and traceable characteristics of blockchain will effectively adapt to flexible securities types such as trust beneficiary certificates and split investment products, providing technological empowerment for asset securitization.
(B) The FSCMA Lifts Restrictions on the Circulation of Investment Contract Securities
The amendment to the Financial Investment Services and Capital Markets Act focuses on expanding the scope of tradable securities, explicitly allowing investment contract securities to circulate through securities intermediaries, with such securities prioritized for issuance in the form of security tokens. Investment contract securities refer to securities types where investors jointly contribute to specific projects and receive returns based on profits; previously, due to their unique rights structure, they could only be directly solicited by issuers and could not enter the public circulation market, limiting investment vitality in fields such as art and livestock.
The new regulations incorporate investment contract securities into the standardized securities circulation system, requiring compliance with registration, information disclosure, and licensing management rules consistent with traditional securities: unlicensed entities are prohibited from engaging in security token intermediary business, and issuers must fulfill comprehensive information disclosure obligations to ensure investors' right to know. This adjustment enhances the market accessibility of non-standardized assets while controlling risks through the existing regulatory framework, forming a balanced mechanism of "innovation expansion + compliance constraints."
(C) Gradual Advancement and Cross-Institutional Collaboration Implementation Path
To avoid market turbulence, the amended bill will take effect one year after its promulgation (expected in January 2027), with the prerequisite of completing the construction of distributed ledger account management infrastructure and the formulation of investor protection rules before it takes effect. The Financial Services Commission (FSC) of South Korea will lead the establishment of a joint consultation mechanism, with members including financial regulatory authorities, settlement institutions, industry associations, market participants, and academic experts, planning to hold the first meeting in February 2026, and setting up three working groups focused on technical infrastructure, issuance regulations, and circulation regulations to refine operational rules. This "legislation first + rule refinement + multi-party collaboration" model reflects South Korea's cautious balance between financial innovation and risk prevention.
II. Asset Tokenization Legislation and Implementation Practices in Hong Kong
As an international financial center, Hong Kong has built a regulatory system for asset tokenization centered on "open + strict access" logic, featuring sandbox testing and collaboration between dual regulatory agencies, forming a "pilot first" model distinct from South Korea's "legislative embedding" path, with its practical results and institutional design providing important references for the regional market.
(A) Layered Regulatory Framework with Dual Agency Division of Labor and Differentiated Regulation
In Hong Kong, the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) collaborate to construct a comprehensive regulatory framework: security-type RWAs strictly adhere to the Securities and Futures Ordinance, requiring compliance with traditional securities regulatory requirements such as licensing and information disclosure; non-security-type RWAs fall under the financial innovation framework, with risk assessment and compliance guidelines led by the HKMA. This layered model ensures regulatory consistency for securities assets while reserving flexible space for innovation in non-standardized assets.
At the same time, Hong Kong has established a licensing system for virtual asset service providers (VASP), requiring all virtual asset trading platforms targeting retail investors to operate with a license, clearly defining core requirements such as capital, cold wallet storage ratios, and compensation responsibilities, thereby controlling risks from the access end. This system resonates with South Korea's account management institution system, both enhancing regulatory penetration through intermediary layers.
(B) Core Practices of Parallel Sandbox Testing and Policy Incentives
The regulatory sandbox is the core mechanism for Hong Kong to promote RWA innovation, allowing companies to test innovative models such as cross-border RWA issuance and cross-chain circulation in a controlled environment through platforms like the "Ensemble Project." The new energy RWA project in collaboration between Ant Group and Longshine Group was selected as one of the first pilot projects, adopting an "SPV + Hong Kong licensed trust" structure to embed equipment rights confirmation and regional restriction clauses, validating the compliant path for asset tokenization in the real economy. The "Digital Bond Funding Scheme" launched in November 2024 provides eligible companies with funding of up to HKD 2.5 million, effectively reducing innovation costs and stimulating market participation enthusiasm.
In terms of practical results, Hong Kong has formed a diversified RWA application ecosystem: In August 2025, Guotai Junan International collaborated with Ant Group to issue structured product tokens, achieving cross-chain circulation on Ethereum through a "two chains, one bridge" structure, connecting mainland assets with global markets; HashKey and Bank of China (Hong Kong) jointly issued HKD 100 million green bond RWAs, lowering the investment threshold to HKD 10,000 and attracting over 200 retail investors, with on-chain activity increasing by 300% compared to traditional markets. These cases confirm Hong Kong's unique value as a "hub for mainland assets going overseas" and provide practical basis for optimizing regulatory rules.
III. Comparative Trends in the Future Development of Regulations in South Korea and Hong Kong
Both South Korea and Hong Kong aim to promote the compliant development of asset tokenization, but due to differences in institutional foundations and market positioning, they have formed two paths of "legislation-led" and "pilot-driven," with future development trends exhibiting characteristics of both collaboration and competition, focusing on three major dimensions.
(A) Path Trade-offs between Institutional Certainty and Innovation Flexibility
South Korea follows a "main law embedding" path, fully integrating security tokens into the existing regulatory system through the revision of core laws, which has significant advantages in legal certainty and judicial predictability, conducive to institutional layout of medium- and long-term compliance projects. However, this model also faces issues of insufficient flexibility, as subsequent fine-tuning to adapt to the characteristics of blockchain technology may require a longer legislative cycle, limiting responsiveness to rapidly iterating market innovations. In the future, South Korea is likely to optimize institutional flexibility through the formulation of working group rules, focusing on issues such as the connection between on-chain data and regulatory reporting, and judicial recognition of smart contract disputes.
Hong Kong adopts a gradual path of "sandbox pilot + rule refinement," accumulating practical experience through pilot projects and then optimizing regulatory rules in reverse, possessing high innovation flexibility to quickly adapt to new scenarios such as cross-border RWAs and cross-chain transactions. However, frequent adjustments to rules may lead to unstable market expectations, and the boundaries of investor protection need to be continuously clarified. In the future, Hong Kong will deepen regulatory sandbox cooperation with financial centers such as Singapore and Dubai, promote mutual recognition of regional regulatory standards, and accelerate the refinement of rules for non-security-type RWAs to strengthen coordination with the mainland financial market.
(B) Differences in Regulatory Focus on Risk Prevention and Market Incentives
The regulatory tone in South Korea is centered on "risk prevention first," reflecting a strong regulatory logic from legislative design to implementation paths: by strengthening intermediary responsibilities through account management institutions and strictly adhering to traditional securities information disclosure and licensing management requirements, systemic risks arising from RWA business are avoided. This model aligns with the administrative-led culture of South Korean financial regulation, and in the future, it will focus on improving investor protection rules, including risk warnings and loss compensation mechanisms, while exploring collaborative application scenarios of local stablecoins and RWAs to build a closed-loop ecosystem.
Hong Kong, on the other hand, emphasizes "balancing innovation incentives and controllable risks," reducing innovation costs through policy funding and sandbox exemptions while controlling risks through strict access thresholds and penetrating regulation. As an international financial center, Hong Kong will focus more on cross-border RWA business in the future, promoting the standardization of cross-chain architecture such as "two chains, one bridge," and exploring the application of central bank digital currencies (CBDC) in RWA settlements, strengthening its position as a global asset allocation hub.
(C) Local Adaptation and International Collaboration in Ecological Development Directions
The asset tokenization ecosystem in South Korea will rely on local conglomerates and fintech companies, focusing on developing scenarios closely linked to the real economy, such as the art and livestock sectors covered by investment contract securities, as well as the tokenization of trust beneficiary certificates. At the same time, South Korea will promote the transformation of traditional financial institutions, compelling brokerages and custodians to upgrade from channel business to compliance consulting and technology integration services, cultivating new intermediary forms.
Hong Kong, leveraging its advantage of international capital aggregation, will focus on the tokenization of high liquidity assets, such as green bonds and structured products, attracting global institutional participation. In the future, Hong Kong will deepen cooperation with the mainland, exploring pathways for mainland assets to be tokenized in Hong Kong, while promoting the alignment of RWA tax and accounting rules with international standards to address compliance barriers in cross-border transactions, constructing an ecological pattern of "global assets + Asian liquidity."
IV. Multidimensional Impact of South Korea and Hong Kong on RWA Business
The amendments in South Korea and the deepening of regulatory practices in Hong Kong will reshape the RWA market landscape in both regions across the three major segments of issuance, trading, and services, creating new business opportunities and competitive dynamics while promoting industry ecosystem upgrades.
(A) Activating Asset Issuance Supply and Optimizing Issuance Efficiency
In South Korea, the implementation of the bill will significantly activate the demand for tokenization of non-standardized assets. The relaxation of circulation for investment contract securities will promote the securitization of assets in alternative investment fields such as art and livestock, while the legal status of distributed ledgers will lower the financing threshold for small and medium-sized enterprises—by issuing security tokens, companies can achieve asset fragmentation, attracting more investors to participate, while shortening the issuance cycle and reducing registration and settlement costs. It is expected that after the bill takes effect in 2027, RWA issuance in South Korea will diversify from traditional assets such as bonds and stocks, with trust beneficiary certificates and investment contract securities becoming initial core growth points.
For Hong Kong, the amendments in South Korea will compel it to accelerate the standardization of RWA issuance rules, particularly forming differentiated advantages in areas such as retail investor access and cross-chain issuance architecture. Hong Kong's existing experience in green bond tokenization will be further promoted, while relying on the "Digital Bond Funding Scheme," the tokenization issuance of small and medium-sized enterprises and new types of assets will continue to grow. The competition between the two regions will drive innovation in issuance mechanisms, such as automatic execution of information disclosure through smart contracts and real-time rights confirmation on-chain, enhancing the efficiency and transparency of the issuance market.
(B) Enhancing Trading Liquidity and Restructuring the Trading Ecosystem
In the South Korean market, the compliant circulation of security tokens will break the time and space limitations of traditional securities trading, and the real-time traceability of on-chain transactions will enhance market liquidity. However, due to strict licensing management, initial trading will be concentrated in licensed intermediary institutions, and retail participation will need to access through compliant channels. The introduction of account management institutions will establish a dual system of "on-chain trading + offline regulation," ensuring transaction efficiency while preventing abnormal trading and money laundering risks. In the long term, on-chain trading may drive innovation in the market maker system, forming a liquidity service system specifically for security tokens.
The Hong Kong trading market will continue to focus on cross-border liquidity, attracting global capital to participate in local RWA trading through cross-chain architecture and regulatory mutual recognition. After the amendments in South Korea, some international projects seeking high compliance certainty may shift to South Korea, compelling Hong Kong to strengthen its differentiated advantages, such as expanding the retail investor market and enriching the supply of cross-border RWA products. At the same time, the competition between the trading markets of the two regions will promote the integration of technical standards, such as on-chain data formats and cross-platform docking protocols, laying the foundation for interconnectivity in the regional RWA market.
(C) Giving Rise to New Service Models and Promoting Institutional Transformation
The service market in South Korea will undergo structural changes: The channel value of traditional brokerages and custodians will weaken, necessitating a transformation into compliance consulting, structural design, and technology integration service providers, offering integrated services such as blockchain system integration and smart contract development for issuers; blockchain infrastructure service providers will become core participants, taking on functions such as distributed ledger operation and on-chain data verification, seizing development opportunities. Additionally, legal, auditing, and other professional service institutions will expand into new business areas around the needs for dispute resolution related to security tokens and on-chain data auditing.
The service market in Hong Kong will leverage its advantages as an international financial center to strengthen cross-border service capabilities, such as providing licensed trust and cross-border settlement services for global issuers, while promoting the integration of fintech with traditional services, cultivating new business models like cross-chain technology services and RWA valuation pricing. The collaboration between the service markets of the two regions will drive the formation of industry standards, such as auditing norms for asset tokenization and risk assessment models, enhancing the overall professionalism of the industry.
V. Seizing Regional Opportunities Under Compliance Innovation
The dual bill amendments in South Korea allowing for security tokens represent an important milestone in the development of asset tokenization in East Asia, with its "legislative embedding" path complementing Hong Kong's "pilot-driven" model, jointly promoting the improvement of the regional regulatory system. According to public data, the global RWA market size has surged from $7.87 billion in the third quarter of 2023 to $32.27 billion in the same period of 2025, a 4.1-fold increase in two years, with the tokenization of traditional assets such as bonds and stocks becoming the core driving force. In this trend, the regulatory competition and collaboration between South Korea and Hong Kong will provide diverse opportunities for market participants.
For institutions, the core opportunity in the South Korean market lies in medium- to long-term layouts under compliance certainty, especially in alternative asset tokenization and transformation services for traditional financial institutions; the Hong Kong market focuses on cross-border liquidity and innovative scenarios, suitable for projects seeking flexibility and global reach. For the industry, the practices in both regions will drive asset tokenization from "technical experimentation" to "compliant scaling," providing a replicable regional development model for the world.
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