South Korea is moving closer to bringing tokenized securities into its regulated financial markets after the Financial Services Commission (FSC) proposed new rules for securities issued and traded using distributed ledger technology.
The FSC announced the proposed revisions on October 1, 2026, covering regulations under the Financial Investment Services and Capital Markets Act and the Electronic Registration Act.
The proposed framework would allow traditional securities, including stocks, bonds, and funds, to be issued and circulated in tokenized form. It would also cover certain fractional investment securities.
The rules are scheduled to take effect on February 4, 2027, after a public comment period running from October 2 to November 11, 2026, followed by the required approval process.
Rules for tokenized securities
Under the proposed changes, tokenized securities would be recorded through distributed ledgers alongside the existing securities registration infrastructure.
The FSC said distributed ledgers would need to be shared across two or more account-management entities, including issuer account-management entities, alongside the Korea Securities Depository (KSD).
The proposed rules would also prohibit entities from directly charging fees for the use of distributed ledgers. The FSC said this is intended to support the continuity of securities-rights confirmation and prevent disruptions to the system.
Entities that issue tokenized securities while also directly managing customers’ securities accounts would face additional requirements.
They would need at least 4 billion won (~$2.9 million at current prices) in equity capital and at least four designated professionals covering account management, internal controls and information technology.
New OTC rules for tokenized bonds
The FSC also plans to introduce an additional over-the-counter (OTC) exchange licensing category for debt securities. OTC markets allow securities to be traded directly between buyers and sellers rather than through a traditional centralized exchange.
The move comes as regulators expect trading in tokenized debt securities among retail investors to grow.
Retail investors would be subject to an annual net purchase limit of 100 million won on each OTC exchange as part of the proposed investor-protection measures.
Government bonds and CBDC pilot
South Korea’s tokenization plans extend beyond the new securities framework.
On July 14, 2026, the government said it planned to conduct a pilot involving tokenized government bonds and the Bank of Korea’s wholesale CBDC infrastructure in 2027.
The project is intended to examine the use of central bank money in transactions involving tokenized government securities.
Officials are also exploring connections between the Bank of Korea’s wholesale CBDC network and external blockchain networks.
However, several details had not been finalized, including the participating institutions, specific government bonds and blockchain infrastructure that would be used in the pilot.
Financial firms prepare for 2027
South Korean financial institutions have already been testing tokenization projects ahead of the new framework.
On August 21, 2026, Shinhan Asset Management signed an agreement with the Solana Foundation, Etherfuse, and Orca to test a Korean won-based tokenized fund for overseas institutional investors. The fund would be backed by a short-term Korean won bond fund. The pilot will test investor onboarding, fund issuance and blockchain operations.
Hanwha Investment & Securities was reported to have completed a tokenized securities platform supporting Avalanche and Hyperledger Besu. The platform was developed with blockchain technology firm FairSquare Lab and is designed to operate across multiple distributed ledger networks.
The Korea Securities Depository is also developing infrastructure that can connect with networks including Avalanche, Hyperledger Besu, and Hyperledger Fabric.
Other financial institutions have also been exploring tokenized products. Last month, Securitize, KB Securities and Optimism Foundation signed an MOU to explore tokenized funds and other securities in South Korea.
Kakao Pay Securities also partnered with Dinari and Ondo Finance to explore tokenized Korean stocks for overseas investors. Both initiatives remain in the exploratory stage.
February 2027 framework
The proposed rules are part of South Korea’s broader plan to integrate blockchain technology into its regulated securities market.
If approved, the proposed subordinate rules will support the implementation of the amended legislation scheduled to take effect on February 4, 2027, allowing eligible securities to use distributed ledger technology (DLT) within the country’s capital-markets system.
The FSC said it will continue discussions with market participants during the consultation period and consider industry feedback before the rules are finalized. The planned 2027 government-bond pilot will provide another test of how tokenized securities can work with central bank money and existing financial infrastructure.
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