Meritz Executive Warns Token-Securities Delay Risks Korean Capital Flight

A senior Meritz Securities executive warned on November 12 that delays in formalizing South Korea's token-securities market could accelerate the outflow of domestic capital and leave the country without a channel to attract foreign funds.

Kang Byung-ha, a managing director at Meritz Securities, said the government must move quickly to establish a regulatory framework for tokenized securities. He presented his remarks at a seminar titled "Digital Assets: The Institutional Era Arrives," held at the National Assembly Members' Office Building in Seoul's Yeouido district, under the heading "Global Digital Asset Market Trends and Institutional Developments at Home and Abroad."

Why the timing matters

Kang argued that a lagging rollout of tokenized securities carries two-sided costs. Korean capital may flow overseas, while the channels needed for foreign capital to enter the domestic market remain underdeveloped. Tokenization could instead serve as a cross-border gateway, allowing issuers to raise capital for domestic stocks and bonds from global investors rather than relying solely on domestic pools.

He framed the digital-asset market as entering a second phase. The first phase was led by cryptocurrency exchanges and retail investors; the second is driven by financial institutions and corporations, including banks and securities firms. A market centered on Bitcoin and altcoins, he said, is set to broaden into tokenized securities, real-world assets (RWA) and stablecoins.

What blocks domestic institutions

Domestic financial firms face significant regulatory constraints when preparing tokenized-securities businesses, according to Kang. Under the current rules, even small-scale test transactions are difficult to conduct regardless of the amount involved. He called for allowing preliminary trials and preparation time so financial companies can safely offer new products.

"Excessively strict regulation can instead push consumers toward offshore channels," Kang said. "We need to create an environment where consumers can invest safely within an appropriate regulatory framework."

Which overseas models should Korea study?

Kang said South Korea should look beyond the United States framework. He pointed to Hong Kong's digital-bond issuance and its financial-infrastructure development as reference points, arguing that combining US regulatory precedent with Hong Kong's implementation examples would support gradual innovation by domestic financial firms.

Investor protection in tokenized equities emerged as a second priority. Rights can differ sharply depending on whether a token merely tracks the price of an underlying share or also guarantees voting power and dividends. If tokens are issued without the underlying shares being secured, investors could suffer losses if the issuer becomes insolvent. Kang said issuance should be limited to qualified operators and paired with clear disclosure of legal rights.

He closed by urging an overhaul of digital-asset rules and state support for financial infrastructure, so that Korean financial companies do not fall behind in global competition. With the institutional phase of digital assets now underway, the timeline for Seoul's regulatory decisions will determine whether domestic capital stays onshore.