Global Overview of RWA Compliance Landscape: South Korea Seeking Asset Tokenization Path Between Regulation and Innovation

When the Nonghyup Bank of Korea transformed its cross-border tax refund system using Blockchain technology, the government included virtual assets in the real estate transaction review list—this fourth largest economy in East Asia is reshaping its future path of asset tokenization amid the range-bound tension between regulation and innovation in digital finance.

In the second half of 2025, two parallel and complementary trends emerged in the financial sector of South Korea. On one hand, NH Nonghyup Bank, one of the five major banks in South Korea, announced the launch of a stablecoin technology test aimed at simplifying the value-added tax refund process for inbound tourists through Blockchain technology.

On the other hand, the South Korean government has revised real estate transaction regulations, stipulating that funds used to purchase real estate must be declared as originating from virtual assets. These two seemingly contradictory directions actually reflect South Korea's dual-track strategy in the digital asset sector: to prevent risks while not wanting to miss out on innovation opportunities.

1. The Global RWA Wave and South Korea's Cautious Approach

The global asset tokenization market is experiencing explosive growth. According to the report “Outlook on the Tokenized Financial System” published by the Korea Capital Market Institute in September 2025, the global tokenization market size skyrocketed from $7.87 billion in the third quarter of 2023 to $32.27 billion in the same period of 2025, growing 4.1 times in just two years.

This growth is primarily driven by traditional financial assets such as bonds and stocks, with the scale of bonds increasing by 13.6 times and stocks by 351.9 times.

The tokenization of sovereign bonds has become a new frontier in global financial competition. The Bank for International Settlements identified government bond tokens, wholesale central bank digital currencies, and deposit tokens as the “foundation of the tokenized financial system” in its Tokenized Financial Market Interoperability Guidelines published in October 2025.

Hong Kong and Europe have adopted a “direct issuance” model, with Hong Kong successfully issuing green government bond tokens in 2023 and 2024. In contrast, the United States is led by the private sector, with asset management companies such as BlackRock and Franklin Templeton tokenizing money market funds.

South Korea has maintained a cautious attitude in this competition. Unlike Japan, which emphasizes market self-discipline, and Hong Kong, which actively promotes the path of bond tokenization, South Korea's regulatory culture is more administratively driven. South Korea has not yet directly launched large-scale RWA government bond projects, with the policy focus still on building a “virtual asset management” and “stablecoin compliance framework,” which are seen as necessary groundwork for the future asset tokenization system.

Kim Sung-soo, a senior researcher at the Korea Financial Research Institute, pointed out: “The South Korean policy community generally believes that only when the regulatory framework for virtual assets is stable can RWA expand rapidly within clear compliance boundaries.” This cautious attitude reflects South Korea's high regard for financial stability and lays a institutional foundation for the healthy development of the RWA market in the future.

II. Regulatory Evolution: From Comprehensive Prohibition to Gradual Opening

The defensive nature of the regulatory system in South Korea is not a temporary conservatism but a product of accumulated historical risks. Since the ICO bubble and exchange money laundering incidents in 2017, the South Korean financial regulatory system has strengthened the tradition of “preventive legislation.” Therefore, before entering the RWA stage, South Korea places greater emphasis on institutional controllability and transparency verification.

In 2017, the South Korean government introduced regulations that, in principle, prohibited corporate entities from engaging in virtual asset transactions. At that time, the government was concerned that corporate virtual asset trading could pose significant threats of money laundering and market overheating, and thus decided to prohibit corporate virtual asset trading to alleviate the highly speculative market conditions.

The implementation of the “Virtual Asset User Protection Law” has become an important turning point. With the law coming into effect on July 19, 2024, a legislative foundation for user protection has been established. At the same time, the market environment has also changed, as major countries around the world widely accept corporate virtual asset trading, and domestic companies have seen an increase in demand for pursuing new Blockchain-related business opportunities.

The Financial Services Commission of South Korea has established a phased roadmap for corporate participation in the virtual asset market. According to this roadmap, in the first half of 2025, the purpose of corporate entities opening real-name verified accounts is limited to selling virtual assets and cashing them out. Law enforcement agencies such as the Prosecutor's Office, the National Tax Service, and the Customs Service, which have the legal authority to confiscate criminal proceeds, have been able to open real-name accounts since the end of 2024.

These phased openings are not due to “relaxed regulation,” but rather a strengthening of market transparency and traceability mechanisms. From allowing law enforcement agencies to hold to the participation of non-profit organizations, South Korea is using a gradual opening to verify the controllability of risks associated with market participation.

An anonymous official from the Financial Services Commission revealed: “Our strategy is to gradually improve the regulatory framework through controlled forms of participation, accumulating experience for more complex asset tokenization scenarios in the future.” This incremental opening strategy is essentially building a reliable institutional infrastructure for the large-scale application of RWA.

3. Market Practice: From Proof of Concept to Regulatory Sandbox

South Korean internet companies are actively laying out digital asset infrastructure. South Korean internet giant Kakao's IT platform operator Kakao Enterprise announced a collaboration with Klay Ape Club to jointly develop NFT and metaverse platforms. The company plans to create a dedicated cloud platform for enterprises based on “Kakao iCloud” and provide it in the form of PaaS, allowing businesses to easily create and issue NFTs.

Commercial banks play a key role in stablecoin testing. The NH Nonghyup Bank's stablecoin pilot project aims to simplify cross-border tax refund processes through blockchain automation. The bank's Executive Vice President Choi Woon-jae stated that the stablecoin-based model “demonstrates how blockchain can genuinely improve customer experience and enhance national competitiveness.”

These experiments are not RWA itself, but rather a probe of the regulatory sandbox - testing the feasibility of Blockchain in value confirmation and cross-border settlement through controlled scenarios. Although this type of stablecoin testing is not on par with RWA, it actually provides technical and regulatory pre-experience for the settlement layer of future asset tokenization.

The trading scale of stablecoins in South Korea has become quite considerable. According to a report by the Korea Economic Daily citing statistics from Upbit exchange in October 2025, the trading volume of stablecoins in South Korea has exceeded 41 billion USD. This data indicates that even before the introduction of a clear regulatory framework, the demand for stablecoins in the South Korean market is already thriving.

IV. Compliance Refinement: The Regulatory Bridge from Virtual Assets to RWA

Non-profit organizations' virtual asset sales face new regulations. Starting from June 2025, the South Korean Financial Services Commission will implement new regulations that allow non-profit organizations and virtual asset exchanges to legally sell their digital assets. This regulatory framework requires institutions to implement internal review mechanisms and strengthen anti-money laundering procedures to ensure compliance.

According to the new guidelines, non-profit organizations that accept cryptocurrency donations must immediately convert these digital assets into fiat currency. These transactions are limited to mainstream cryptocurrencies available on exchanges based on Korean Won to comply with stricter oversight measures.

The listing standards for virtual assets are becoming stricter. Starting from June 1, additional market protection measures will come into effect. Digital assets seeking new listings must maintain a minimum circulation volume, while market price orders will face restrictions during the initial listing phase. These regulations specifically target the prevention of “pump and dump” schemes and speculation on zombie and meme Tokens that may disrupt the market.

Although this type of review mechanism targets crypto assets, it also provides a regulatory template for the future listing of RWA Tokens. The establishment of these compliance mechanisms will become a bridge for the institutionalization of RWA in South Korea, rather than an endpoint.

Real estate is the core area of anti-money laundering regulation in South Korea. The government has included virtual assets in the reporting system, essentially bringing the cash flow of digital assets into the traditional financial regulatory framework, creating cross transparency. The regulation of virtual assets in real estate transactions has been strengthened, and it is now required to declare the source of funds from virtual assets when purchasing real estate.

Buyers using cryptocurrency derivatives to purchase real estate will need to submit supporting documents for these transactions, thereby creating a clear audit trail between digital asset sales and real estate investments. This mechanism demonstrates how South Korea applies traditional financial regulatory experience to the emerging digital asset field, laying the groundwork for more complex RWA compliance scenarios.

V. Development Challenges: Legislative Delays and Strategic Choices

However, a refined regulatory framework does not mean a smooth market. South Korea still faces a dual challenge of legislative lag and regulatory balance at the institutional level.

Legislative delays are a major obstacle to the development of RWA in South Korea. The legislation for securities-type tokens has been delayed for two years, causing South Korea to fall behind in the “tokenization finance” trend. Researchers at the Korea Capital Market Institute emphasize the urgent need for South Korea to establish its own roadmap for government bond tokens to cope with this competition concerning future financial infrastructure.

Currency sovereignty anxiety drives stablecoin regulation. South Korea currently does not have a dedicated stablecoin regulatory framework. At this stage, stablecoins are included in the general definition of “virtual assets” according to the “Virtual Asset User Protection Act.” This regulatory gap has raised concerns in South Korea about currency sovereignty and capital outflow.

Policymakers are concerned that foreign stablecoins may threaten South Korea's monetary sovereignty and lead to capital outflows and a reliance on foreign stablecoins for trade settlement, thus causing regulatory arbitrage issues.

South Korea has adopted a dual-track strategy that combines “defense” and “offense”. The defensive aspect focuses on the speculative risks associated with virtual assets, while the offensive aspect targets institutional tokenization and stablecoin systems. While strictly regulating virtual assets, South Korea is actively building a state-led digital currency system.

In 2025, the Bank of Korea slowed down the development of CBDC, suspending the planned pilot at the end of 2025 and instead supporting a “bank-first” stablecoin model.

Unlike Japan's emphasis on market self-discipline, South Korea's regulatory culture is more administratively driven, which restrains the pace of innovation due to bureaucratic procedures. Intensified regional competition has prompted South Korea to accelerate its pace—Japanese companies are establishing digital asset reserves, Hong Kong has issued comprehensive stablecoin regulations, and the number of cryptocurrency exchange licenses in Singapore is set to double in 2024.

To address these challenges, South Korea is adopting a dual-track approach: allowing non-bank stablecoin experiments within a regulatory sandbox, while promoting institutionally-led stablecoins by commercial banks.

6. Future Path: Technological Neutrality and Global Coordination

If the first five years were the foundation for defensive regulation, then the next three years will be a race for technological interoperability and regulatory neutrality.

The RWA market in South Korea contains huge potential. A research report by China Galaxy Securities classifies South Korea as having an “innovation-oriented” regulatory approach, alongside Singapore and the UAE, which are seen as representatives focusing on regulatory sandboxes, optimized access mechanisms, and tax-friendly policies. This regulatory approach achieves a dynamic balance between compliance safety and incentive mechanisms, lowering pilot thresholds while maintaining financial stability and institutional trust.

Regulatory consistency and global standard coordination are crucial. According to a report by the Korea Economic Daily in March 2025, Kim Soyoung, Vice Chair of the Financial Services Commission of Korea, emphasized at a meeting with the virtual asset industry and related experts that the progress of establishing virtual asset regulation domestically must ensure regulatory consistency with global standards.

This statement echoes the “Tokenized Financial Market Interoperability Guidelines” published by the Bank for International Settlements in October 2025, emphasizing that regulatory standards in various countries need to align with cross-border settlement and AML systems.

Technical neutrality and interoperability constitute the core of the future. South Korea's hybrid structure may become an experimental sample in the Asian region, aiming to achieve regulatory visualization and cross-agency data sharing through the collaboration of public chains and private infrastructure. South Korea is attempting to ensure technical neutrality and interoperability between public chains and private infrastructure through its hybrid structure, connecting the traditional financial system with grassroots innovation.

In the coming years, South Korea may become one of the first countries to issue a joint stablecoin by major commercial banks. This bank-issued stablecoin serves institutional use cases that require wholesale settlement and regulatory trust, while non-bank stablecoins are optimized for the retail economy and the Web3 ecosystem, forming a parallel structure.

In South Korea, the future of RWA is not a technological leap, but a reshaping of the regulatory order. From the stablecoin testing of NH Nonghyup Bank to the roadmap for the phased opening of corporate participation in the virtual asset market by the Financial Services Commission, South Korea is seeking a balance between strict control and experimentation.

The global RWA market competition has just begun. For South Korea, regulation is not a constraint, but a form of strategic self-restraint—seeking innovative gaps within order may be its unique approach to entering the tokenization era. Whether South Korea can find the right balance between defense and offense, regulation and innovation will determine its position in this competition that concerns the future financial landscape.

Source of some information:

· “From “Plugging Leaks” to “Guiding”: The Philosophy of Digital Asset Governance by the South Korean Government and the Battle for Financial Sovereignty”

· “Korean Internet Giant Kakao's Subsidiary to Build NFT Issuance Platform for Enterprises”

· “South Korea Includes Virtual Assets in Real Estate Regulation: Impact on Transaction Transparency”

· “South Korea Aims to Challenge Dollar Stablecoins Through Blockchain-Driven VAT Refunds”

Author: Liang Yu Editor: Zhao Yidan