South Korea Unveils Tokenized Securities Rules, Keeps Distributed-Ledger Requirements
Summary
- South Korea’s Financial Services Commission said it had issued a legislative notice for amendments to subordinate regulations under the Electronic Securities Act and the Capital Markets Act related to tokenized securities, aiming to put them into effect on Feb. 4, 2027.
- The revisions would expand tokenized securities issuance to conventional securities such as stocks, bonds and funds, while maintaining requirements on distributed-ledger structure and a ban on direct compensation such as gas fees.
- The proposal also includes an issuer account management institution system, a new over-the-counter exchange licensing category, and an annual net-buying limit of 100 million won for retail investors, while calls for looser rules will undergo further review.
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South Korea’s Financial Services Commission has released draft amendments to subordinate regulations under the Electronic Securities Act and the Capital Markets Act ahead of the February 2027 launch of its tokenized securities regime. The proposal would expand the scope of tokenized securities issuance from fractional investment securities to conventional securities including stocks, bonds and funds, while maintaining existing requirements for distributed-ledger participants and usage.
The Financial Services Commission said on Oct. 2 that it will accept public comments through Nov. 11 on proposed amendments to the enforcement decrees of the Capital Markets Act and the Electronic Securities Act, as well as related supervisory regulations tied to tokenized securities. The revisions are set to take effect on Feb. 4, 2027, after approval by the commission, a review by the Ministry of Government Legislation and a Cabinet meeting.
Under the Electronic Securities Act amendments, the range of securities that can be issued as tokenized securities would be widened from existing fractional investment securities to standardized securities such as stocks, bonds and funds. The distributed ledger must be structured so that an electronic registration institution and at least two account management institutions participate.
The draft also includes a requirement banning direct compensation for the use of a distributed ledger. The commission said the measure reflects the ledger’s role as a public register recording legal rights and is intended to ensure record reliability, maintain business continuity and prevent delays in confirming rights. As a result, a typical public blockchain structure that generates gas fees during transaction verification may have difficulty meeting the current requirements.
The proposal also spells out the “issuer account management institution” system, which would allow securities issuers to manage investor accounts directly. To register, an applicant must have minimum equity capital of 4 billion won, or about $2.9 million, one specialist each in account management and internal controls, and two information-technology specialists.
The tokenized securities trading market would also be expanded. The commission plans to create a new over-the-counter exchange licensing category for trading debt securities, in addition to unlisted shares and non-cash trust beneficiary certificates. The annual net-buying limit for retail investors at each over-the-counter exchange would be set at 100 million won, or about $72,000.
Still, the legislative notice is not final. The commission said it will further review industry requests during the public comment period, including easing distributed-ledger requirements, lowering the capital threshold for issuer account management institutions and raising trading limits for retail investors.
