The market capitalization of "stock tokens," which turn shares of companies representing the world such as Nvidia, Tesla, and Apple into tokens, a type of cryptocurrency, has risen 173.2% in a month, showing steep growth. In contrast, in Korea it remains unclear how to classify and regulate stock tokens. A blind spot is emerging in which investing in U.S. stocks through stock tokens allows investors to avoid paying taxes.
According to Castle Labs, a platform that analyzes the market for real-world assets (RWA) that tokenizes and enables transaction of physical assets such as stocks, bonds, and real estate, on the 10th the market capitalization (TVL) of stock tokens rose 173.2% from a month earlier to $1.34 billion (about 1.9018 trillion won).
Stock tokens that ranked high by market cap include Exodus, a virtual asset wallet developer, as well as Tesla, the Standard & Poor's (S&P) 500 exchange-traded fund (ETF), the Nasdaq-100 ETF, and the 20-year U.S. Government Bonds ETF. Blue chips such as Nvidia, Apple, Google, and Meta, coin-related stocks such as Coinbase and Circle, healthcare names such as Eli Lilly and Pfizer, and consumer staples such as Coca-Cola and Walmart have also been tokenized. Although trading volume is minimal, Japan's Toyota stock has also been released as a token.
Stock tokens are being transacted mainly in countries outside the United States. If transaction is permitted within the United States and spreads worldwide, market capitalization is expected to grow larger than it is now. According to Bloomberg and other foreign media, Nasdaq asked the U.S. Securities and Exchange Commission (SEC) to amend its rules to allow the listing of stock tokens. As SEC Chairperson Paul Atkins said tokenization "can spur innovation in financial markets," the market expects a positive outcome.
Stock tokens are designed to be linked to actual stock prices. In the case of stock tokens transacted on virtual asset exchanges Bybit and Kraken, the actual shares are held by a custodian, and tokens, which are certificates of the deposited shares, circulate and are transacted. When the share price rises, the tokenized stock price also rises, allowing for capital gains. Settlement is completed in about 10 minutes, and 24/7 transaction is a strength.
However, financial authorities have not clearly stated which law will be used to regulate and manage stock tokens. The biggest issue is whether they are securities. While the trend is to classify stock tokens as the same securities as ordinary stocks, it remains controversial. When it announced token securities guidelines in 2023, the Financial Services Commission also said, "Whether a token is a security must be judged individually."
In particular, for stock tokens transacted on Bybit and Kraken, shareholder rights are not guaranteed. Holding stock tokens does not register you as a shareholder to exercise voting rights or receive dividends. The physical shares are merely held by a specific institution. It is unclear whether stock tokens, which only track naturally formed stock prices in the market, can be recognized as securities similar to stocks.
Bybit notes, "(Stock token) investment is not the same as direct equity investment in a company," adding, "There are no voting rights or dividend eligibility, and there is no legal claim to company shares or residual assets." It also added, "Depending on the laws and regulations of the jurisdiction, (stock tokens) may be classified as securities, derivatives, or virtual assets."
Because it is unclear whether stock tokens are securities, a regulatory gap is occurring. If you invest in U.S. stocks using stock tokens, it is impossible to determine whether it is "stock investment" or "virtual asset investment," effectively excluding it from taxation. Ordinary U.S. stock investors must pay a 22% tax, including capital gains tax, on annual gains exceeding 2.5 million won. If stock tokens are classified not as securities but as virtual assets, no tax is due. Taxation on virtual assets has been deferred until Jan. 1, 2027.