Key Points
- South Korea’s Financial Services Commission proposed detailed rules for issuing and trading tokenized securities ahead of a February 2027 regulatory rollout.
- Eligible assets would include stocks, bonds, funds and certain fractional investment securities issued and circulated through tokenized infrastructure.
- Proposed requirements include minimum capital for issuers, new OTC trading licenses and annual retail investment limits on each OTC exchange.
South Korea is moving closer to establishing a formal regulatory framework for tokenized securities after the Financial Services Commission proposed detailed rules governing their issuance, management and trading.
The proposal comes ahead of regulatory amendments scheduled to take effect in February 2027, marking a significant step toward integrating distributed-ledger infrastructure into the country’s securities market.
Stocks, Bonds and Funds Eligible for Tokenization
Under the proposed framework, stocks, bonds, funds and certain fractional investment securities would be eligible to be issued and circulated in tokenized form.
The framework is designed to establish regulatory requirements for securities represented through distributed-ledger technology while maintaining existing capital-market protections.
The proposal follows a three-phase roadmap unveiled by South Korean regulators in September for transitioning securities issuance and trading toward distributed-ledger infrastructure.
Capital Requirements for Tokenized Securities Firms
The proposed rules would establish specific requirements for companies issuing and managing tokenized securities.
Companies that issue tokenized securities while directly managing customer accounts would be required to maintain at least 4 billion Korean won, or approximately $2.8 million, in equity capital.
Such companies would also need dedicated compliance and technology personnel to support their operations under the proposed framework.
The requirements would create additional operational and financial standards for businesses seeking to participate directly in the tokenized securities market.
New OTC Trading Framework
The Financial Services Commission is also proposing changes to South Korea’s capital-markets regulations covering over-the-counter trading.
The revisions would establish an additional OTC exchange license for debt securities. At the same time, retail investors would be limited to 100 million won, approximately $70,000, in annual net purchases on each OTC exchange.
The measures are intended to establish a regulated trading structure as tokenized securities expand beyond issuance and into secondary-market activity.
Regulatory Framework Targets February 2027
The proposed rules are part of a broader legislative and regulatory process designed to recognize distributed ledgers as infrastructure for issuing and circulating securities.
The public consultation period is scheduled to run from Friday through Nov. 11. Following the consultation, the proposals will proceed through the required approval process.
The regulations are scheduled to take effect on Feb. 4, 2027, alongside amendments that formally recognize distributed-ledger technology as infrastructure for securities issuance and circulation.
Outlook
South Korea’s proposed framework would provide a formal regulatory structure for tokenized securities while establishing capital, compliance and trading requirements for participating firms.
The February 2027 implementation date gives regulators and market participants several months to complete the consultation and approval process. The final rules will determine how stocks, bonds, funds and other eligible securities can be issued and traded through distributed-ledger infrastructure in South Korea.
Comparison, examination, and analysis between investment houses
Leave your details, and an expert from our team will get back to you as soon as possible
