[Namsan Stroll] As the Security Token Era Approaches, What Products Are Needed?

Product Development Accelerates Ahead of February 2027 Security Token Framework
Investment Targets Expand from Movie Revenue to Stakes in Hotels and Artworks
Transparency in Rights, Profit Distribution, and Fund Recovery Will Determine Success

With amendments to the laws on security tokens set to take effect on February 4, 2027, the industry is closely watching the development of products to be tokenized. The Financial Services Commission has announced proposed revisions to subordinate regulations that would cover not only fractional investment securities but also the tokenization of stocks, bonds, and funds. For the possibilities opened up by the new framework to translate into investor confidence, products must answer several questions: What are investors investing in? What rights do they receive? Where do returns come from, and how can investors recover their funds?

Swiss Sygnum Bank Tokenizes Picasso’s “Woman with a Beret.” Artandobject

When a movie ticket is sold, who gets the money? The theater takes its share, and investors' portion is determined only after distribution and production costs have been settled. The Japanese film "Treasure Island" raised part of its production budget by issuing security tokens that entitled investors to participate in the project's profits and losses. Phillip Securities opened subscriptions for "Treasure Island" on July 24, 2024. On August 15, the payment and allocation date, the issuer, CPF Film Fund, issued 3,680 security tokens at 100,000 yen each. Through the production company, the fund invested indirectly in the film's production committee, and investors share the portion of revenue from theatrical distribution, online screenings, and overseas sales that is returned to the fund after costs are deducted. Investors may lose some of their principal depending on the film's box-office performance. The terms set May 31, 2027, as the end of the investment period in principle and restricted early redemption.

In the United States, Aspen Digital issued securities backed by an investment in a hotel. According to the notice of exempt offering filed with the U.S. Securities and Exchange Commission (SEC), the first sale took place on October 10, 2018. The company raised $18 million by selling 18 million tokens to accredited investors, representing an indirect investment in the St. Regis Aspen Resort in Colorado. Each token represented an indirect ownership interest in one share of the issuer's common stock held in custody. Investor-to-investor trading on the alternative trading system tZERO began on August 24, 2020. Aspen Digital's tokens demonstrated to the world the concept of fractional investment: "Individuals can use blockchain to buy and hold a stake in a U.S. ultra-luxury hotel and benefit from its appreciation in value."

Mitsubishi UFJ Trust and Banking Corporation and other parties announced on March 27, 2025, that they had completed a public offering and issuance of security tokens backed by rental housing in Jiyugaoka, Tokyo. The issuance totaled 1.805 billion yen. Investors acquired beneficial interests in a trust backed by real estate, while the bank managed the register of rights holders and SBI Securities handled the underwriting.

The issuance of security tokens (STO) for Pablo Picasso's "Woman in a Beret," carried out by Sygnum Bank, a Swiss digital asset bank operating within the regulated financial sector, in partnership with Artemundi, a company specializing in art investment, is regarded as a pioneering case of a regulated financial institution tokenizing ownership of a physical artwork on the blockchain. The work was valued at 4 million Swiss francs, and its ownership was divided into 4,000 digital tokens. Sygnum Bank announced that the sale of the work in May 2023 generated a cumulative return of approximately 20% over the investment period.

Although STO products are possible across a range of sectors, designing them for the art sector requires distinguishing between the artwork itself and the income it generates. Separate permission is needed to print an image of a painting on clothing. For a product involving the display of an artist's work on a company's media wall, it is necessary to confirm who authorized the display, for what period, and how much the company agreed to pay. Data must show how much can be distributed to investors after deducting the artist's royalties and production costs from the various forms of income an artwork may generate. It must be possible to provide details of the price at which the work was sold and which companies paid licensing fees to use its image. Financial institutions must use this information to assess the rights to be issued and establish procedures for verifying settlement records.

To understand what they will receive when they buy security tokens, investors need to start by drafting the final settlement statement before opening the initial subscription. Products that can explain which contracts document revenues and costs, and how investors' shares will be calculated, are the ones ready to be brought to market.

Hong Jisuk, CEO of Art Token and convergence content planner

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