Bank of Korea Releases ‘Current Status and Future Policy Tasks of Domestic and International Asset Tokenization’,
Illustration created by ChatGPT.
The global asset tokenization market is rapidly growing, but the domestic market remains at the stage of ‘fractional investment’ in some physical assets such as real estate and music copyrights. The lack of a legal foundation for token securities has limited activities to temporary operations through regulatory sandboxes, and tokenization of traditional financial assets like government bonds or money market funds (MMFs) has yet to be attempted. Consequently, the Bank of Korea suggested that to ensure stable market growth, a systematic core infrastructure for valuation and custody needs to be built, along with a phased expansion roadmap considering the characteristics of each asset.
According to the report ‘Current Status and Future Policy Tasks of Domestic and International Asset Tokenization’ released by the Bank of Korea on the 14th, the global asset tokenization market size was estimated at $50.37 billion as of the end of March this year. Although this is relatively small compared to the traditional financial market size, the growth rate is fast. The annual growth rate of the global asset tokenization market rose from 93% in 2024 to 169% in 2025.
By asset type, credit assets such as mortgage loans and corporate loans accounted for $25.65 billion, or 51% of the total. There has been a rapid increase in tokens based on MMFs and government bonds recently. These MMF and government bond-based tokens amounted to $14.26 billion, accounting for 28% of the total, with U.S. Treasuries making up 91% of this amount. Tokens of commodities like precious metals and energy also amounted to $7.3 billion, representing 14% of the total.
Meanwhile, the domestic market is still at the fractional investment stage. In Korea, the focus is on investing by dividing the rights to profits derived from non-standard assets such as music copyrights, real estate, and artworks. According to data compiled by the Bank of Korea using company announcements and media articles, the cumulative size of domestic fractional investment was about KRW 640 billion as of January this year.
Park Sang-hoon, head of the Non-Traditional Financial Analysis Team at the Bank of Korea’s Financial Stability Department, explained, “Unlike the global market, direct tokenization of traditional financial products has not yet occurred in the domestic market. Instead of simply increasing the number of products, it’s more urgent to establish basic infrastructure such as forming abundant liquidity and building a disclosure system to gain investor trust.”
The Bank of Korea believes that to ensure the domestic asset tokenization market takes hold early, trading needs to be activated, focusing on non-standard assets with confirmed market demand. This means securing the liquidity of fractional investment products such as music copyrights and real estate, and building basic infrastructure that can enhance investor trust, including valuation, custody, and disclosure.
The expansion to traditional financial assets should be approached incrementally by considering the characteristics of each asset. While government bonds or MMFs have relatively standardized cash flows making them easier to tokenize, stocks pose more complexity due to rights relationships such as dividends and voting rights. Therefore, they emphasized the need for a detailed expansion roadmap that considers the ease of tokenization, benefits compared to existing securities, demand base, and potential to secure settlement assets.
However, there are concerns that as tokenization expands, financial stability risks could also grow, potentially leading to accumulated vulnerabilities in the financial system. Tokenized assets can be traded 24 hours on-chain and settled instantly, but underlying assets are subject to trading hours, settlement cycles, and sale procedures of the existing financial market. If market unrest arises, investors may want to quickly redeem tokenized assets, but converting actual underlying assets into cash immediately can be difficult, leading to liquidity mismatches.
Re-use in collateralization leading to increased leverage is also cited as a risk factor. If the process of using tokenized assets as collateral repeatedly happens, it could result in large-scale selling and a chain of deleveraging when the market falters. If connected with stablecoins, the shock could spread to traditional financial asset markets like short-term government bonds or deposits.
Park noted, “Tokenization makes setting collateral easier and increases efficiency, but if re-collateralization becomes active, leverage could significantly increase, acting as an instability factor in the financial system. It’s essential to establish an on-off chain integrated monitoring system and early warning indicators from a macroprudential perspective, and prioritize using a central bank currency or deposit tokens, known for their high reliability, as a settlement method for tokenized assets.”