South Korea has proposed detailed rules for bringing tokenized securities into its regulated capital markets from Feb. 4, 2027, including a KRW100 million annual retail purchase cap on each licensed over-the-counter exchange.
Summary
- South Korea will let stocks, bonds and funds enter its tokenized securities framework in 2027.
- Retail investors face a KRW100 million annual net purchase limit on each licensed OTC exchange.
- Issuers managing customer accounts need KRW4 billion capital plus dedicated compliance and technology staff members.
- Distributed ledgers must involve two account managers plus Korea Securities Depository under proposed rules framework.
- Public comments run through November 11 before approvals and the February 4, 2027 launch date.
The Financial Services Commission said its proposed subordinate regulations entered public consultation on Oct. 2 and will remain open for comments through Nov. 11. The measures cover which securities can be tokenized, how distributed ledgers must operate, requirements for issuers managing customer accounts and a new OTC licensing structure.
South Korea opens token rules to regular securities
The FSC proposal allows conventional securities such as stocks, bonds and investment funds to be issued and circulated in tokenized form. Fractional investment products, including non-monetary trust beneficiary certificates and investment contract securities, fall within the same framework.
South Korea is treating tokenized securities as another form of regulated security, not as a separate category of crypto asset. The FSC confirmed in January that amendments to the Electronic Registration Act and Financial Investment Services and Capital Markets Act had passed the National Assembly, giving distributed ledgers legal recognition as securities registries.
Issuers will still need to follow securities registration procedures and work within the existing capital-markets framework. The revised law allows ownership and issuance information to be recorded through approved distributed ledgers while retaining the Korea Securities Depository within the registration system.
The latest proposal fills in several operating details that were left to subordinate regulation. It specifies eligible securities, infrastructure requirements and the conditions companies must meet if they want to issue tokenized securities while managing investors’ accounts themselves.
Still, not every tokenized stock or fund will become available immediately in February. South Korea’s earlier three-stage tokenized securities roadmap sets a narrower first phase when the amended laws take effect.
The initial rollout covers privately pooled money-market funds and bonds reserved for institutional investors, unlisted shares issued through trust structures and publicly offered fractional investment securities. A later phase is expected to extend tokenization to all publicly offered securities.
Retail investors face a KRW100 million trading limit
The FSC plans to create another OTC exchange licensing category specifically for debt securities, adding it to the framework already designed for unlisted shares and non-monetary trust beneficiary certificates.
Officials expect tokenization could lead to more retail trading of debt securities, which currently attract limited buying and selling between individual investors. The new licensing category would provide a regulated venue for those transactions once tokenized debt products enter the market.
Retail investors would face an annual net purchase limit of KRW100 million on each OTC exchange. Net purchases will be calculated by subtracting total sales from total purchases made through the individual platform during the year.
The limit applies per OTC exchange, according to the FSC proposal. Regulators described the measure as an investor-protection requirement for the new trading system.
Industry participants can still challenge that figure during consultation. The Korean-language FSC notice lists raising the KRW100 million cap among issues already raised by market participants for consideration during the formal rulemaking process.
Other disputed areas include whether the minimum capital requirement for issuer account managers should be reduced and whether distributed-ledger requirements should be relaxed. No change to those proposed thresholds has yet been approved.
Token issuers need capital and dedicated staff
Companies that issue tokenized securities and directly maintain customer securities accounts would need at least KRW4 billion in equity capital under the proposed framework.
The FSC requires those issuer account management entities to employ at least one account-management professional, one internal-control professional and two information-technology professionals.
Distributed-ledger infrastructure faces separate conditions. A ledger must be shared across at least two account management entities, including eligible issuer account managers, alongside the Korea Securities Depository.
Regulators would prohibit operators from charging users directly for access to the distributed ledger. The FSC said the restriction is intended to prevent problems in confirming securities rights and takes into account the public function performed by the ledger within the regulated registration system.
The requirements follow South Korea’s September policy roadmap, which set out a staged approach to moving existing securities onto blockchain-based infrastructure. The FSC said securities firms and the Korea Securities Depository would build the necessary systems before the first phase begins.
Financial firms are already preparing products around that schedule. KB Securities’ plan for tokenized funds with Securitize and Optimism starts with a proposed money-market fund for institutional investors, a product category that closely matches the government’s first rollout phase.
February 2027 begins the first stage
The Feb. 4, 2027 effective date comes from the amendments passed by the National Assembly in January. The FSC has spent 2026 developing the technical, issuance and trading rules needed before the laws become operational.
Once the first stage begins, authorities plan to monitor the initial products before opening tokenization to all publicly offered securities. The timing of the second stage has not been fixed.
A third stage would connect securities infrastructure with blockchain-based payment and settlement systems, potentially using stablecoins. The FSC’s September roadmap said implementation will depend partly on the results of the first phase, technology adopted by market participants and South Korea’s separate stablecoin legislation.
Work on that settlement model has already started in the private sector. Eugene Investment’s stablecoin settlement trial for tokenized securities is testing whether subscription, payment and settlement can occur within a single blockchain-based process.
The trial does not mean stablecoin settlement has been approved for the national tokenized securities system. The FSC’s official roadmap places that type of onchain payment infrastructure in the final stage, with the regulatory details still dependent on future legislation.
Public consultation on the current subordinate rules runs through Nov. 11. The Korean FSC notice states that the proposals must then pass Financial Services Commission approval, legislative review, a vice-ministerial meeting and Cabinet consideration before the scheduled Feb. 4 implementation.
