Will Won-Denominated Funds Open a Path to Overseas Token Markets? [Crypto Briefing]

[Financial News] As the regulatory path for overseas tokenization projects using domestic funds becomes clearer, the asset management industry is watching closely to see whether real-world asset (RWA) businesses can move toward commercialization. The FSC has determined that, under certain conditions, a structure in which securities of an offshore fund containing a domestic money market fund (MMF) are issued as tokens overseas is not subject to the Act on Electronic Registration of Stocks and Bonds.
According to the financial authorities and the industry on the 25th, the structure reviewed in the FSC's legal interpretation involves a domestic financial investment firm issuing an MMF, which an independent offshore institutional investor purchases through an offshore fund, after which the offshore fund securities are issued and sold overseas as tokenized securities.
The FSC said that if the token issuance takes place outside the country and its effects cannot be regarded as occurring in Korea, it is not subject to the Act on Electronic Registration of Stocks and Bonds. It also said that even if a domestic financial investment firm sells an MMF while aware of an offshore institutional investor's token issuance plan, it would be difficult to view that as a violation of the law.
What is drawing attention in the financial investment industry is that a structure has been identified that could connect domestic financial products with overseas blockchain distribution networks. Some asset management companies are already pushing ahead with tokenization pilot projects and the establishment of on-chain asset management infrastructure with overseas blockchain firms. They are conducting proof-of-concept (PoC) tests on the full process of issuing and distributing tokenized funds in offshore markets, while also reviewing compliance requirements such as KYC and AML.
Industry observers say the FSC's legal interpretation could serve as a reference case for reviewing offshore issuance structures in existing tokenization projects.
However, certain conditions must be met before an actual product can be issued. The issuer must be economically and legally independent from the domestic financial investment firm, and the tokenized securities must be sold only to overseas investors through private placement. Resale to residents in Korea must also be blocked through technical and contractual measures.
The FSC noted that its interpretation could change if the domestic financial investment firm and the offshore institutional investor are deemed to be effectively the same entity, or if the tokens are resold to domestic investors. It also pointed out that this interpretation applies only to a specific offshore fund structure containing an MMF, so it is difficult to conclude that the same view would automatically apply to other assets such as exchange-traded funds (ETFs), bonds, or real estate.
An industry source said, "This FSC ruling has eased some of the uncertainty under the Act on Electronic Registration of Stocks and Bonds regarding a structure in which an independent offshore entity issues and distributes tokenized securities overseas based on domestic underlying assets," adding, "However, for actual commercialization, the structure must be designed not only to ensure the independence of the issuer and block domestic resale, but also to cover custody, redemption, and distribution."

[email protected] Kim Mi-hee Reporter