[Exclusive] South Korea Says Tokenized Stocks Are Securities as Government Prepares Taxes

FSC Says Tokenized Stocks Qualify as Securities

Finance Ministry Says Current Capital Markets Law Allows Immediate Taxation

Dividend and Capital Gains Taxes Set to Apply

South Korea’s Financial Services Commission has made clear that fast-growing tokenized stocks should be treated as securities rather than virtual assets. With the regulator’s interpretation now clarified, the government is poised to accelerate work on tax rules and the infrastructure needed to enforce them.

An FSC official told Bloomingbit on July 9 that tokenized stocks are “basically shares, a standardized security, issued in token form,” and therefore “must naturally be regarded as securities.” If the rights structure is the same as that of conventional shares, they qualify as securities under the Capital Markets Act regardless of the technology used to issue them.

Tax authorities say they are ready to move ahead as soon as financial regulators classify tokenized stocks as securities. A Ministry of Economy and Finance official previously told Bloomingbit that if the FSC judged tokenized stocks to be securities, taxation could begin immediately this year under the current Capital Markets Act. While detailed classifications may vary by token, instruments whose economic substance is that of a security would fall under dividend income taxation. The ministry also views tokenized stocks as securities.

Until now, the market had largely assumed tokenized stocks would be classified as virtual assets and would not be taxed until next year, when taxation of virtual assets is scheduled to begin. Tax authorities, however, had already determined that tokenized stocks are securities in substance and had been waiting for the FSC’s interpretation. With the FSC now clarifying their status, the government has grounds to tax them under existing law without a separate legislative revision.

A functioning tax collection system will take longer to build. Much of the trading in tokenized stocks now takes place offshore, including on overseas crypto exchanges, making it difficult for tax authorities to immediately track individual transactions. The finance ministry said tokenized stocks are taxable in principle, meaning taxpayers must report them voluntarily. It added that unreported trades can only be taxed once transaction data is secured, and that related systems are being prepared.

For that effort, tax authorities are participating in the Organization for Economic Cooperation and Development’s Crypto-Asset Reporting Framework, or CARF. The system is designed to let participating jurisdictions exchange information on crypto-asset transactions annually. Because full implementation is scheduled to begin next year, effective taxation of tokenized stocks is unlikely to take hold this year.

Tax treatment for tokenized stocks will probably mirror that for ordinary overseas equities. Dividends would be subject to a 15.4% dividend income tax, including local income tax. Taxes withheld overseas would be settled in the same way as for existing foreign stock investments. Capital gains would face a 22% tax rate, the same as for gains on overseas stocks, with a basic deduction of 2.5 million won.

Demand for tokenized stocks has recently surged among investors in U.S. shares including xAI, Tesla and Nvidia. According to real-world asset data platform RWA.xyz, global tokenized stock transfers reached $8.41 billion in June, up 105% from the previous month. Overseas crypto exchanges including Binance and Backpack have also listed tokenized versions of Korean shares such as Samsung Electronics and SK Hynix, drawing local investors.

Tokenized stocks are assets issued in blockchain-based token form and linked to conventional shares. Investors can buy tokenized stocks tied to underlying shares on overseas crypto exchanges and sell them if prices rise to realize gains. Some products also pay dividends, giving them a return profile similar to ordinary overseas equities. Their key attractions include 24-hour trading and settlement in about 10 minutes.