Pending a series of real estate investment projects…Institutionalization is far away. Will it be safe
We are preparing for a public offering of real estate investment products in the second half
Investor ‘safety’ concerns as STO legislation delayed ↑
“From authorities to trust companies and securities companies…Enough protection”
This article has been translated into English through AI.
Amid a series of real estate fragmentation investment products scheduled to be released in the second half of the year, some investors are raising concerns about the safety of real estate fragmentation investment as the legalization of the issuance of token securities (STO) has been delayed. The industry said that there is no big problem with safety as it has investor protection under the regulation of financial authorities and the authorities are expressing their willingness to institutionalize it.
According to the real estate STO industry on the 18th, Casa, Punble, and Lucent Block will introduce new real estate fragmentation investment products between the end of June and August and begin public offering. All three companies, the operators of Korea’s leading real estate fragmentation investment platform, are designated as financial regulatory sandbox innovation financial services by financial authorities.
Financial regulation sandbox refers to a system that exempts or suspends current regulations under certain conditions (period, location, and scale) for new products and services using new technologies to allow market launch, testing, and verification. STO projects that have not yet been institutionalized in Korea can also be operated if designated as sandboxes.
Recently, concerns over the safety of real estate investment have been raised among investors as STO-related legislation has been delayed. Casa, Punble, and Lucent Block are all operators that have been designated as sandboxes by the authorities, and it is pointed out that if the Sandbox period ends without legalization, there will be uncertainties in the continuity of the business.
The industry says there is no safety problem because investor protection devices are in place. Real estate fragmentation investment products are non-monetary trust beneficiary securities that have been designated as innovative financial services. The beneficiary certificates can be issued based on the registration of commercial real estate with the trust company. In addition, in order to protect the customer’s deposit, the securities company is responsible for account management.
In addition, the Korea Deposit Insurance Corporation has also applied the depositor protection system to the amount deposited in securities firms for fragmented investment since 2022. If a securities firm goes bankrupt, it will be protected up to 50 million won, including cash remaining in the customer’s account and other products subject to deposit protection.
“If you look at a copy of the building register, the owner is listed as a trust company,” an STO industry official said. “Even if a piece investment company goes bankrupt, the value or ownership of the building is held by the trust company, so the value of the building is maintained.”
“Even if a piece investment company goes bankrupt, there is a system in which a trust company sells its building and sends it to investors in consultation with securities companies as much as the investment ratio,” he said. “All of the things that make products with trust companies or deposit investments with securities companies are investor protection devices that are being implemented under sandboxes.”
Another STO industry official said, “We don’t have much experience in token securities or fragmented investment yet, so I think the lack of the system can easily create anxiety.” He added, “However, as the government and financial authorities have expressed their will to institutionalize it, institutionalization will be possible next year,” adding, “I understand that the authorities are also preparing alternatives for cases where the law is not revised.”