The Bank of Korea argued that Central Bank Digital Currency (CBDC) or commercial bank deposit tokens should be the primary means of payment for fractional investment (tokenization) that conducts a transaction of real estate, stocks, bonds, and more as tokens. Because stablecoins issued by general corporations lack stability, banks that meet strict regulations should be at the center.
The Bank of Korea stated accordingly in Domestic and overseas asset tokenization status and future policy tasks, released on the 14th. A Bank of Korea official said, "In particular, when tokenizing financial assets within the institutional financial system, it is often done with Central Bank Digital Currency (CBDC)," adding, "Most countries prefer this framework in terms of reliability."
Tokenization is a type of fractional investment that allows buying and selling by embedding the legal rights of an asset into a token created with Blockchain technology. Targets for tokenization range widely from real assets such as real estate and artworks to financial assets such as stocks and bonds. If ownership of a 1 billion won real estate can be split into 10,000 tokens and transacted at 100,000 won apiece, that is described as tokenizing the real estate. A holder who purchases one token can take 0.01% of the revenue generated from the real estate.
The United States uses stablecoins as a means of payment for tokenization. To buy one real estate token, a buyer would pay 70 stablecoins. Stablecoins are designed to have the same value as legal tender. One stablecoin has the same value as $1.
The Bank of Korea has said the introduction of stablecoins is necessary, but that the Central Bank and commercial banks should lead rather than general corporations in terms of reliability. Governor Shin Hyun-song of the Bank of Korea also noted in an inaugural address that the CBDC and deposit tokens will be used more widely.
The global tokenization market size was tallied at $50.37 billion (about 75.16 trillion won) on Mar. 3. With an annual growth rate of 169% last year, it is expanding rapidly. In Korea, as of Jan. 1, the cumulative investment size was estimated at 640 billion won.
In Korea, music copyrights and fractional real estate investment were temporarily allowed in 2019 through designation as an innovative financial service (regulatory sandbox). Later, with amendments to the Electronic Securities Act and the Financial Investment Services and Capital Markets Act in Feb. 2, a foundation was established to issue and distribute token securities.