The proposals would allow traditional financial instruments including stocks, bonds and funds to be issued and circulated in tokenized form, alongside fractional investment products structured as non-monetary trust beneficiary certificates and investment contract securities.
The measures fill in operational details left to secondary regulation after South Korea’s National Assembly approved legislation establishing the tokenized securities framework in January. The FSC opened the latest rules for public consultation on Oct. 2, with comments due by Nov. 11 before the proposals move through the remaining approval process.
What Will Tokenized Securities Issuers Need to Operate?
A key part of the proposal concerns companies that both issue tokenized securities and directly maintain securities accounts for their customers. These issuer account management entities would need minimum equity capital of 4 billion won, or roughly $2.8 million.
They would also need dedicated personnel covering securities-account management, internal controls and technology. The FSC proposes at least one account-management specialist, one internal-control professional and two information-technology professionals.
The distributed-ledger infrastructure itself would also face structural requirements. Ledgers would have to be shared across at least two account management entities alongside the Korea Securities Depository, reducing reliance on a single issuer or infrastructure provider for records establishing investors’ securities rights.
The FSC also plans to prohibit companies from directly charging fees simply for the use of the distributed ledger, reflecting the regulator’s view that the ledger forms part of the underlying market infrastructure rather than a separate chargeable investment service.
The details advance a broader capital-market modernization effort already under way. FinanceFeeds previously reported that South Korea was integrating token securities into its wider securities-market infrastructure overhaul, including work on settlement systems and digital market architecture.
Investor Takeaway
The 4 billion won capital floor means direct token issuance and account management will not be an unrestricted fintech activity. Capital, staffing and infrastructure requirements favor firms able to combine blockchain technology with the operational controls already expected in regulated securities markets.
How Will Retail Trading Be Limited?
The FSC is also preparing a new over-the-counter exchange licensing category for debt securities. Existing plans already contemplate OTC venues for unlisted shares and certain fractional investment products, but regulators expect tokenization to make direct trading in debt instruments more accessible to retail investors.
Retail participation would nevertheless be capped. Each investor would be limited to 100 million won, approximately $70,000, in annual net purchases on each OTC exchange. Net purchases would be calculated as total purchases minus total sales rather than simply measuring gross trading activity.
The restriction reflects a broader attempt to expand access to tokenized securities without immediately giving retail investors unlimited exposure to products that may initially trade with thinner liquidity than conventional listed securities.
The latest proposal develops the three-stage tokenization roadmap announced in September. Under that plan, South Korea intends to begin with selected institutional and fractional-investment products before expanding tokenization across more publicly offered securities. A later stage could connect tokenized securities directly to stablecoin-based settlement infrastructure.
Investor Takeaway
The OTC limit creates a controlled route for retail participation rather than an unrestricted secondary market. Liquidity, the number of licensed venues and the range of securities admitted during the first phase will help determine whether the new structure develops into a meaningful alternative to conventional brokerage channels.
Why Is February 2027 Becoming the Key Deadline?
The underlying amendments to South Korea’s Electronic Registration Act and Financial Investment Services and Capital Markets Act are scheduled to take effect on Feb. 4, 2027. The legislation recognizes distributed ledgers as infrastructure that can be used to record and circulate securities while keeping tokenized instruments inside the existing securities regulatory framework.
The initial phase is expected to focus on privately placed money-market funds and bonds reserved for institutional investors, unlisted shares structured through trusts, and publicly offered fractional investment securities. Broader public securities tokenization is expected later, depending on the first phase and development of the supporting infrastructure.
Financial institutions are already preparing for that timetable. Hanwha Investment & Securities has completed development of a blockchain-based platform ahead of the new regime, as FinanceFeeds reported in September, illustrating how regulated brokerages are positioning before the legal framework becomes operational.
Investor Takeaway
The February launch is primarily an infrastructure and regulatory milestone rather than an immediate opening of every Korean security to blockchain trading. The first phase will show whether regulated tokenization can improve issuance, settlement and secondary-market access without creating liquidity or investor-protection problems that slow the later stages.
