What To Know:
- South Korea has launched a Digital Strategy Team under KOFIA’s new K-Capital Market Division.
- The team will focus on security tokens and blockchain-based financial products, supporting rule interpretation, pilot programs, and standardized practices for issuance and trading.
- The decision aims for a controlled, institutional approach to tokenization amid rising domestic demand and global competition.
South Korea establishes a dedicated Digital Strategy Team to support member firms expanding into virtual asset-related businesses. The new unit was launched under Korea Financial Investment Association (KOFIA’s) recently created K-Capital Market Division. The division will also handle pension systems and taxation policy coordination, underscoring the ways digital assets are getting more involved in the country’s more expansive financial framework.
South Korea Taps on Tokenized Finance with Digital Strategy Team
The Digital Strategy Team will be responsible for designing security tokens and structured financial products associated with blockchain technology. Its establishment moves beyond testing discussions to application in Korea’s capital markets. KOFIA serves as a self-regulatory group that represents securities companies, investment banks and asset managers all over the country.
This initiative positions the association as a unified support entity for institutions dealing with new regulations and technical requests through the proliferation of a dedicated digital unit. Industry experts who know the way the initiative works say members of the team will help firms interpret digital asset rules, coordinate pilot programs and standardize practices in relation to token issuance and trading.
South Korean authorities have already signaled that security tokens will be the basis for the nation’s digital asset policy. Regulators have repeatedly differentiated them from speculative crypto assets and cited protection for customers and control over institutions. By clustering digital assets in the same division that operates pensions and taxation, the association recognized the potential impact of tokenization on sustainable long-term investment flows.
Pension funds are among the largest capital pools in the Korean market, and the involvement in tokenized products in the future would involve significant compliance coordination. Tax treatment is one of the remaining areas not settled. Digital transactions present reporting, valuation, and cross-platform settlement issues. Focusing experts in one place will give KOFIA one-size-fits-all guidance across member firms instead of siloed interpretations. Market participants say the move reflects rising pressure from both domestic demand and international competition.
Korean retail investors remain among the most active digital asset users globally. At the same time, financial centers such as Hong Kong and Singapore have accelerated licensing regimes for tokenized securities. European markets have advanced through the MiCA framework, while Japan continues refining its exchange-focused regulatory model.
Against that backdrop, Korea’s financial institutions face growing urgency to develop compliant products without exposing themselves to regulatory uncertainty.
Analysts note that traditional securities firms hold client trust and capital scale, but often lack internal blockchain expertise. Technology-driven crypto companies possess infrastructure knowledge but operate outside the institutional system.
The team is expected to coordinate educational programs, facilitate communication with regulators including the Financial Services Commission, and provide guidance on risk controls for digital issuance models. Pilot frameworks for tokenized funds and asset-backed securities are also under consideration, according to industry sources.
Rather than encouraging retail crypto trading, the initiative targets infrastructure development within regulated markets. That includes custody models, settlement mechanisms, compliance reporting, and interoperability standards.
For Korea’s capital markets, the shift represents a measured approach. The objective is not rapid expansion, but controlled integration.
Observers say this structure reduces friction for firms testing new products while allowing regulators to monitor activity through established industry channels. It also limits fragmentation by preventing each institution from interpreting policy independently.
The Digital Strategy Team begins operations as global financial institutions increase interest in asset tokenization. Estimates from multiple research groups suggest trillions of dollars in traditional assets could migrate onto blockchain-based systems over the coming decade, largely driven by efficiency gains in settlement and fractional ownership.
Rather than allowing digital finance to develop outside the capital market, the association is pulling it inward, placing it under institutional supervision and industry coordination.
Also Read: South Korea Moves Ahead With Next Phase of Crypto Regulation
