Summary
South Korea plans to begin tokenized securities with private funds, private corporate bonds and unlisted equities after legislation takes effect in 2027. Public securities would follow, while a later phase could introduce stablecoins for on-chain settlement if the country’s stablecoin framework and market infrastructure are ready.
A staged approach to putting securities on-chain
South Korea’s Financial Services Commission, or FSC, has published a three-stage road map for tokenized securities. The plan starts with selected private-market and unlisted assets, moves toward publicly offered securities, and eventually envisions stablecoins being used to settle transactions on-chain.
The policy direction is notable because South Korea is not proposing to place tokenized securities in a wholly separate regulatory category. Under amendments to the Electronic Securities Act and the Capital Markets Act passed on January 15, 2026, tokenized securities are to be recognized as a third form of issuance alongside paper securities and electronic securities. Existing requirements covering securities registration, disclosure and licensed intermediaries would continue to apply.
The amendments are scheduled to take effect on February 4, 2027. The first stage of the road map is expected to begin at the same time. According to the source material, South Korea is presenting the framework as a sequence of legal, infrastructure and market steps rather than as an open-ended experiment conducted outside the existing securities system.
That distinction matters. Tokenization does not only change how an asset is represented or transferred. It also raises questions about which record establishes ownership, how investor rights are enforced, who is responsible for a wallet or account, and how a transaction becomes final. By placing tokenized securities inside the established securities framework, the FSC is attempting to address those questions before expanding market access.
Phase one targets controlled market segments
The first phase focuses on products and participants that are relatively easier to define and supervise than widely traded public equities. On the fund side, the initial category includes private money market funds for institutional investors. On the bond side, private corporate bonds are included. For equities, the plan starts with unlisted interests using a trust-beneficiary securities structure. The underlying shares remain in an existing registration system, while investors receive tokenized certificates representing interests in the trust.
Certain fractionalized investment products that have already been offered to the public are also included in the initial scope. The structure suggests that South Korea wants to test the operational benefits of tokenization without immediately replacing the core legal registration process for every underlying asset.
The choice of private and unlisted products also provides a more controlled environment for testing issuance, investor onboarding, account administration, disclosure, recordkeeping and secondary trading. Publicly listed securities involve a much broader investor base and a more demanding set of market functions, including continuous trading, corporate actions, price discovery and market surveillance. The first phase gives regulators and market infrastructure operators time to identify operational weaknesses before those requirements are added.
The proposed access rules reinforce this cautious approach. Licensed securities firms and dealers would be able to handle tokenized securities without obtaining an additional dedicated license. A nonfinancial company that wants to operate its own investor accounts for tokenized securities would need at least 4 billion won in paid-in capital, along with dedicated account-management, compliance and information-technology staff. An over-the-counter trading platform would first need consultation approval from the Financial Supervisory Service.
The road map also includes limits for retail participation in certain activities. Retail net purchases on OTC platforms would be subject to an annual limit of 100 million won. For fractionalized products, the subscription cap would be 30 million won or 5% of the offering size, whichever is lower. These limits are designed to contain exposure and reduce the potential impact of unsuitable products, concentrated participation or information asymmetry during the early stages of the market.
Custody and shared-ledger standards are central
The Korea Securities Depository, or KSD, is working on technical acceptance standards for securities firms connecting to a shared ledger. The FSC plans to publish draft subordinate-rule amendments for public consultation by the end of September, according to the source material.
This infrastructure work may be as important as the list of eligible assets. A tokenized security is not simply a blockchain token held at an address. The system must connect the token record to legally recognized rights, investor identity, account controls, corporate actions, compliance monitoring and settlement obligations. Institutions operating wallets or custody systems would need controls for authorization, segregation of client assets, transaction records, key management, incident response and regulatory access.
The proposed trust structure for unlisted equities illustrates the challenge. If the underlying shares remain in a conventional registration system while investors hold tokenized trust interests, the market must clearly define the relationship among the token holder, the trustee, the securities registrar, the intermediary and the ledger operator. A technical transfer on a blockchain cannot by itself determine which party bears legal responsibility when a transfer is disputed, a key is lost or a record on one system conflicts with a record on another.
KSD’s standards will therefore help determine whether tokenization becomes a reliable market infrastructure or remains a collection of isolated issuance projects. Interoperability, reconciliation and finality will be particularly important if different issuers, trading venues and custodians use different distributed ledgers.
Phase two would extend the model to public securities
The FSC has not assigned a specific date to the second phase. Its timing will depend on several conditions: the stability and efficiency of systems deployed in the first phase, the technical maturity of market participants, interoperability among different distributed ledgers, and progress on South Korea’s stablecoin legislation.
The main change in phase two would be an expansion from private and unlisted products to publicly offered securities. The FSC also plans to study tokenization experiments associated with the New York Stock Exchange and Nasdaq. The Korea Exchange would lead the validation and pilot work for models involving listed equities.
Moving into public markets would raise the standard for reliability. A public tokenized security would have to support a larger and more diverse investor population while preserving disclosure obligations and controls against manipulation. It would also need to handle dividends, voting, stock splits, suspensions, transfers and other corporate actions in a way that remains consistent with the existing market framework.
The second phase is consequently not just a larger asset list. It is a test of whether blockchain-based records can support the full set of services expected from a public securities market. Interoperability will be a practical issue as well as a technical one. If issuance, custody, trading and settlement occur across separate ledgers, the market will need trusted mechanisms for identity, asset status, transaction finality and reconciliation.
Stablecoins are reserved for the final settlement layer
The final stage would seek to complete securities delivery and cash settlement on the same ledger. Stablecoins would serve as the settlement instrument. The FSC has cited BlackRock’s BUIDL tokenized fund and Hong Kong’s tokenized green bonds as reference cases in the road map.
A shared-ledger settlement model could reduce the time gap between the transfer of an asset and the movement of funds. It could also reduce manual reconciliation among multiple systems. But it would connect securities-market risk with payment and stablecoin risks. The settlement asset would need a clearly defined legal status, credible reserves, redemption arrangements and operational controls.
The system would also have to address network outages, compromised keys, unauthorized transfers, compliance holds and error correction. These are not purely technical questions. They determine whether a settlement is final, whether a transaction can be reversed, and which institution is responsible when the ledger and the underlying legal record diverge.
South Korea is pursuing stablecoin legislation separately. The framework under discussion would require stablecoin issuers to maintain minimum paid-in capital of 5 billion won, according to the source material. The third phase, however, depends on the stablecoin legal framework being established. Stablecoins therefore appear in the road map as a later settlement layer, not as the initial route into tokenized securities.
A contrast with speed-first tokenization
The Korean approach contrasts with faster-moving tokenization models that place traditional assets on permissionless or less tightly defined blockchain structures before all legal and market questions have been resolved. Such models can generate early user activity and liquidity, but they may also leave unresolved issues around issuer consent, ownership rights, investor protection and regulatory jurisdiction.
South Korea’s sequence is the opposite: establish legal status, build custody and clearing infrastructure, begin with institutional and private-market products, and only then consider public securities and stablecoin settlement. The trade-off is clear. A rules-first model may provide greater legal and operational clarity, but it is likely to take longer and require coordination among regulators, exchanges, securities firms, custodians and technology providers.
The road map should therefore be read as a policy framework rather than as proof that a broad tokenized securities market is already operational. Draft subordinate rules, KSD’s technical standards, pilot results and stablecoin legislation could all affect the eventual timetable. The most important test will not simply be how many assets are issued on-chain. It will be whether the legal rights represented by those tokens, the responsibilities of institutional account and custody operators, and the finality of settlement can be made consistent across the financial system.
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