South Korea advances tokenized securities rules ahead of 2027 rollout

South Korea's Financial Services Commission has published proposed regulations that lay out how securities can be issued and traded in tokenized form, as part of a broader move to recognize distributed-ledger infrastructure for capital markets. The draft would permit tokenization of equities, bonds, funds and certain fractional investment products, subject to the new rules. The proposal follows a three-phase roadmap announced on Sept. 4 to transition securities issuance and trading onto distributed-ledger systems.

Under the draft, entities that both issue tokenized securities and directly manage customer accounts would face enhanced capital and operational requirements. Such firms would need at least 4 billion Korean won in equity capital and must maintain dedicated compliance and technology staff. These requirements are intended to ensure firms handling tokenized securities have financial and personnel resources in place to manage risks and regulatory obligations.

The revisions also introduce an additional over-the-counter (OTC) exchange license specifically for debt securities, distinguishing debt trading from other secondary market venues. For retail participation, the proposal would cap annual net purchases by an individual investor at 100 million won per OTC exchange, creating limits on how much retail buyers can acquire through these venues.

The draft rules enter a public consultation window that closes on Nov. 11, after which the approval process will proceed toward implementation. If approved, the regulations are slated to take effect on Feb. 4, 2027, concurrently with amendments that formally recognize distributed ledgers as acceptable infrastructure for issuing and circulating securities.