Can K-Pop Be Tokenized? Industry Calls for STO Rules Tailored to Cultural Content

Cultural and artistic content will need valuation methods and regulatory frameworks that differ from those used for traditional financial assets if it is to be used as underlying assets for security tokens, industry participants said. They argued that cultural content requires a distinct approach because much of its value stems from fandom and cultural appeal.

A policy seminar titled “How Fans Can Become Investors in K-Culture Content” was held on July 8 at the National Assembly Members’ Office Building in Yeouido, Seoul. The event was hosted by Democratic Party lawmakers Ahn Do-geol and Kim Hyun-jung and organized by the K-Culture Contents Industry Association. Participants included Musicow, Hanteo Global, THE K STO, Barunson N Project and the Ministry of Culture, Sports and Tourism.

In the opening presentation, Musicow Chair Jung Hyun-kyung argued that music copyrights are well suited as underlying assets for STOs.

“Music copyrights generate stable cash flow through recurring royalty income, and they have the characteristics of an investment asset because their correlation with the macroeconomy is low,” Jung said. “They can also differentiate themselves from conventional financial products by adding the cultural value of the global K-pop fandom.”

He added that cultural content is a uniquely competitive Korean asset, supported by fandom and diverse revenue models. That, he said, could create a virtuous cycle by drawing foreign capital into South Korea’s cultural industry and giving creators a new financing channel.

Jung also said regulatory changes are needed for an STO market backed by cultural content to grow. Issuers seeking to securitize music copyrights currently must comply not only with the Capital Markets Act but also with multiple legal frameworks, including copyright law, he said, and many of those requirements do not fit the industry’s actual structure. A substantial share of K-pop intellectual property also does not align with the current copyright trust framework, making asset securitization difficult and creating a funding hurdle for smaller entertainment companies, he added.

In the discussion session, participants identified the creation of a valuation system that reflects the characteristics of cultural content as a central task.

Choi Yoon, a director at Barunson N Project, said valuation was the biggest obstacle in advancing film STOs. Content at the script and planning stages is difficult to price objectively, he said, requiring standards that differ from those used for traditional financial assets.

Kwak Young-ho, chief executive officer of Hanteo Global, said existing copyright-based STO models alone may not be enough to attract a global fandom. He proposed a full-cycle cultural content STO model that can identify smaller agencies with strong growth potential.

Jung said the current valuation structure for music copyrights allows securitization only after royalties have been generated steadily for at least six months, when an offering price can be calculated. While that approach is reasonable from an investor-protection standpoint, it limits market expansion, he said. Consumers also tend to prefer copyrights tied to new songs, while creators want to raise funds at the earliest stage, when financing needs are greatest.

Authorities said they would work to upgrade the system with those issues in mind. Na Woong-jae, an official at the Ministry of Culture, Sports and Tourism, said content intellectual property that is already generating revenue can be valued through a combination of quantitative and qualitative assessments, and that the Korea Creative Content Agency has been steadily upgrading the related system. Still, he said more detailed discussion is needed on whether pre-production content can be securitized based on qualitative assessment, since it is an intangible asset with no physical form. He added that the government will continue refining the valuation framework to support funding for content creators while protecting investors.