[Edaily Marketin Won Jae-yeon Reporter] Ahead of the implementation of the security token offering (STO) system, the evaluation market—which verifies the risks of assets and products eligible for issuance—is gaining momentum. Following the valuation process that determines the fair value of underlying assets, a credit rating system is also being established to analyze the repayment potential of bond-type security tokens.

According to the financial investment industry on the 5th, all three major domestic credit rating agencies have begun establishing evaluation systems related to security tokens. Previously, on the 31st of last month, the domestic credit rating agency NICE Rating signed a business agreement with Blueard, a security token operator, to conduct valuations of the underlying assets for investment contract securities and trust beneficiary certificates utilizing corporate-held assets. It will also verify whether the calculated asset prices are appropriate. Blueard identifies companies and assets to be issued as tokenized securities and is responsible for issuance and platform development.

The NICE Group has been preparing for the tokenized securities rating market since 2023. NICE P&I launched the Tokenized Securities Rating Council—comprising NICE Credit Rating, appraisal firms, accounting firms, and law firms—and has been working to establish valuation methods and data standards for each underlying asset. Last year, it also partnered with Koscom to explore ways to utilize data generated on a joint tokenized securities issuance platform for valuation and pricing information services.

Korea Credit Rating Agency also established the “Digital Finance TFT”—the first dedicated digital finance organization in the credit rating industry—last month. The goal is to analyze the risks associated with tokenized securities and blockchain-based digital bonds and to develop methodologies for incorporating these findings into credit ratings. In addition, Korea Corporate Rating has been preparing valuation models for tokenized securities underlying assets since 2023, including the development of a valuation model for art investment contract securities in collaboration with Together Art.

The rating industry’s active engagement in these related businesses stems from the recent establishment of a legal framework allowing for the formal issuance of tokenized securities. The amendment to the Electronic Securities Act, which recognizes distributed ledgers as electronic registration accounts, will take effect on February 4, 2027. Once the amended law takes effect, securities can be registered, issued, and managed on distributed ledgers that meet certain requirements, and demand for verifying the value of issued assets and product structures is expected to grow.

Tokenized securities are not a separate, new asset class but rather a form of securities defined under the Capital Markets Act—such as debt securities, equity securities, income securities, and investment contract securities—issued using distributed ledger technology. Accordingly, even for the same type of tokenized security, the valuation targets and methods differ depending on whether investors receive a share of the profits from the sale of the underlying assets or receive principal and interest from the issuer.

Last May, the Financial Services Commission (FSC) also proposed, at a token securities consultative body meeting, that the ability to objectively value the underlying asset be a key requirement for fractional investment securities. It also outlined the principle that risks associated with the underlying assets and business structure must be managed, and that sufficient information necessary for investment decisions must be disclosed. As the FSC is also reviewing the extent to which “pooling”—the bundling of the same type of underlying assets into a single product—should be permitted, the importance of establishing asset-specific valuation standards is expected to grow even further.

The focus of evaluating fractional investment products varies depending on the product structure. For fractional investments utilizing non-traditional assets such as artworks, music, and content, the primary focus is on valuation to determine the fair value of the underlying assets. Since investors receive returns based on the sale of assets or business performance rather than principal and interest, it is necessary to comprehensively examine past transaction prices, earnings performance, rights relationships, and future disposability. However, as there are many assets for which market prices are difficult to verify, it is necessary to standardize criteria to ensure that results do not vary from one appraisal agency to another.

In contrast, for digital bonds—which are tokenized corporate bonds—credit ratings that assess the issuing company’s ability to repay principal and interest are key. For securitized tokenized securities—such as those bundled from real estate loans or accounts receivable—it is necessary to examine the cash flows of the underlying assets, the likelihood of delinquency, the insolvency protection provided by special purpose entities (SPCs), and the asset manager’s ability to recover funds. Added to this are digital infrastructure risks, including smart contract errors, distributed ledger failures, and the business continuity of custodians and platform operators.

From the perspective of rating agencies, the emergence of this new assessment target creates an opportunity to secure a foothold in the nascent market. However, many believe it will be difficult for tokenized securities ratings to grow into a revenue stream large enough to replace corporate bond ratings in the short term. This is because the actual volume of issuances is still low, and when small-denomination products dominate the market, it is difficult for rating agencies to charge high fees per transaction.

Furthermore, not all tokenized securities are required to undergo external rating. If corporate bonds or asset-backed securities (ABS) are issued as tokens, they are subject to the same credit rating and disclosure regulations that apply to existing corporate bonds and ABS. On the other hand, for investment contract securities and trust beneficiary certificates backed by assets such as artworks or music, external valuation data is currently used during the review of securities registration statements; however, it has not yet been determined to what extent this will be mandated under the regulations set to take effect next year.

In particular, trust beneficiary certificates cannot be issued based solely on the valuation of the underlying assets. Actual issuance can only proceed once related systems are put in place to ensure that the underlying assets are securely segregated as trust property and that investor rights are protected in the event of problems with the trustee.

An official in the fractional investment industry stated, “The entry of appraisal firms into the STO market is a welcome sign,” adding, “Market trust can only be built by preventing the inflation of underlying asset values or the creation of information asymmetry between issuers and investors.”

An STO industry official noted, “Intangible assets or non-standard assets with complex revenue structures differ in nature from existing credit rating methodologies, so establishing evaluation criteria tailored to the characteristics of these assets is key,” adding, “For assets issued through a trust structure, relevant laws must also be revised before actual product launches can take place.”