"Asset Tokenization Market Activation Should Rely on Central Bank Money, Not Stablecoins"

BOK Issue Note: Domestic and Global Asset Tokenization Status and Future Policy Tasks
Global Asset Tokenization Market to Grow to USD 2-4 Trillion by 2030
Digital Transformation of Securities: A Paradigm-Shifting Innovation for Capital Markets
Central Bank Money as Settlement Assets to Maintain Monetary Singularity and Trust

In order for the rapidly expanding asset tokenization market to become stable and active in Korea, there is analysis suggesting that payment methods should be based on central bank (digital) currencies or bank deposit tokens, rather than stablecoins. If a won-denominated stablecoin is to be introduced, it is assessed that it could be used as a supplementary option only if it is issued by a trusted entity such as a bank, with strict adherence to regulations, sufficient guarantee of redeemability, and stability of reserve assets.

Global Asset Tokenization Market to Surge to USD 2-4 Trillion by 2030

According to the "BOK Issue Note: Domestic and Global Asset Tokenization Status and Future Policy Tasks (Park Sanghoon, Kim Minsu, Kim Jin, Jo Seongmin)" released by the Bank of Korea on May 14, the global asset tokenization market was valued at USD 50.37 billion as of the end of March 2026. This growth is attributed to the increasing trend in the United States and other major countries of recording rights to various financial and real assets—including loans, government bonds, money market funds (MMF), and alternative investment assets—on distributed ledgers to create investment products. Distributed ledger technology allows multiple participants to replicate and share transaction information, managing the ledger collectively without a centralized administrator or a single data repository.

Although the asset tokenization market remains relatively small compared to traditional financial markets, it has shown sharp growth, with institutional investor participation rising from 65% in 2023 to 93% in 2024, and 169% last year. By asset class, credit asset tokens such as corporate loans (USD 25.65 billion, 51% of the total) have led the growth. Recently, there has also been a significant increase in MMF and government bond-based tokens (USD 14.26 billion, 28%) and commodity tokens such as precious metals and energy (USD 7.3 billion, 14%). Global investment banks and consulting firms project that the asset tokenization market will grow to approximately USD 2-4 trillion by 2030.

In Korea, the market is still in its early stages, with distributed ledger technology being applied to fractional investment in non-traditional assets such as real estate and music copyrights through innovative financial services (regulatory sandbox initiatives). Fractional investment refers to products that allow investors to share claims on returns generated by non-traditional assets such as real estate, music copyrights, premium beef, and artwork. As of January 2026, the cumulative size of fractional investment stands at about KRW 640 billion. When simply compared to the global asset tokenization market, this accounts for less than 1%. Although amendments to the Electronic Securities Act and the Capital Markets Act in February have established a legal basis for the issuance and distribution of token securities, the bill allowing the issuance of non-monetary trust beneficiary securities remains pending in the National Assembly.

"Digital Transformation of Securities: A Paradigm-Shifting Innovation for Capital Markets"

The tokenization approach can improve the issuance, distribution, and settlement of assets, enhancing efficiency, flexibility, accessibility, and transparency. By integrating the entire transaction process on a distributed ledger, it shortens settlement cycles and reduces intermediary and management costs. It enables trading environments free from temporal and geographical constraints. Through smart contracts, atomic settlement ensures that payment is completed only when pre-determined conditions are met, reducing counterparty risk and expanding investment accessibility by fractionalizing high-value assets. Real-time sharing of transactions also increases operational transparency. This is considered an innovation that goes beyond a simple technological change, transforming the paradigm of capital markets through the digitalization of securities.

However, asset tokenization also poses potential risks to financial stability. Factors such as liquidity mismatches between token securities and underlying assets, increased leverage due to rehypothecation, operational, technical, and legal vulnerabilities, as well as concentration on a few platforms and market fragmentation, can all amplify financial stability risks. In particular, if the link with the stablecoin market strengthens, there is a risk that shocks could spill over into traditional financial asset markets such as short-term government bonds and deposits, which serve as reserve assets for stablecoins.

Park Sanghoon, Head of the Non-traditional Finance Analysis Team at the Bank of Korea's Financial Stability Department, pointed out, "If investors use tokenized assets as collateral to borrow stablecoins, and then use the borrowed stablecoins to purchase more tokenized assets—repeating this cycle—any large-scale sell-off could rapidly transmit shocks to traditional financial asset markets such as bank deposits or government bonds, which serve as reserve assets for stablecoins." He also explained that vulnerabilities discovered during the tokenization process, such as operational or technical errors or legal loopholes, could escalate into systemic risks. If blockchain networks such as Ethereum become excessively fragmented, network segmentation could lead to liquidity dispersion, weakening price discovery functions. He emphasized, "The current size of the global tokenization market is still negligible compared to traditional financial markets, but given the rapid growth of tokenization, we must be cautious about the potential accumulation of vulnerabilities in the financial system."

Central Bank Money as Settlement Assets to Maintain Monetary Singularity and Trust

The report accordingly suggests that as the market matures, priority should be given to using central bank money—including digital currencies (CBDC)—or bank deposits (including deposit tokens) as settlement assets for tokenized assets, in order to maintain monetary singularity and ensure reliability. Park explained, "Most countries except for the United States, such as the United Kingdom and the European Union, are operating pilot tests using only legal tender, not stablecoins."

For the early establishment of Korea's asset tokenization market, it is important to secure liquidity so that the trading of token securities can be activated, particularly in the area of non-traditional assets (fractional investments) where market demand has been verified. There is also a need to systematically build infrastructure for asset valuation, custody, and disclosure to further enhance investor confidence. Park stated, "For traditional financial assets, it is necessary to develop a step-by-step expansion roadmap that considers the specific characteristics of each asset, and to devise measures to resolve platform fragmentation," adding, "Through pilot tests and regulatory sandboxes, we need to minimize unforeseen impacts on capital markets from asset tokenization, and resolve market fragmentation by building infrastructure based on common protocols and standards." From a macroprudential perspective, it is necessary to establish a risk management framework that includes monitoring by combining on-chain and off-chain data, conducting stress tests tailored to the characteristics of tokenization, and fostering cooperation among the Bank of Korea, financial regulators, and related institutions.

This content was produced with the assistance of AI translation services.