South Korea has taken a major step toward formalizing blockchain-based capital markets, as lawmakers advanced legislation that creates a legal framework for issuing and trading tokenized securities.
Key Takeaways:
- South Korea has approved a legal framework for issuing and trading tokenized securities.
- Blockchain-based securities will be regulated and traded through licensed intermediaries.
- The new rules are set to take effect in 2027.
The move opens the door for regulated security token offerings (STOs) and places distributed ledger technology firmly within the country’s existing financial system.
On Thursday, the National Assembly passed amendments to both the Capital Markets Act and the Electronic Securities Act during a plenary session, according to an official government release.
South Korea Sets Legal Rules for Issuing and Trading Tokenized Securities
The changes recognize tokenized securities as legitimate financial instruments and define how they can be issued, distributed and traded under Korean law.
Under the revised framework, the Electronic Securities Act allows eligible issuers to create tokenized securities using blockchain infrastructure.
Amendments to the Capital Markets Act, meanwhile, permit those products to be traded as investment contract securities through brokerages and other licensed intermediaries.
Regulators say the goal is to combine the efficiencies of distributed ledgers with existing investor protections.
The Financial Services Commission said the reforms are expected to improve how securities accounts are managed and to expand the use of smart contracts across market infrastructure.
Officials also described tokenized securities as a broad category that can apply to both debt and equity products, rather than a niche asset class.
Government officials highlighted potential benefits for non-standard investment contracts that have historically faced distribution limits, such as securities tied to real estate, artwork or agricultural projects.
By bringing these products under a regulated STO framework, authorities aim to widen investor access while maintaining oversight.
Following legislative approval, the bills will move to the state council before being formally promulgated by the president, a process widely expected to conclude without major changes.
The laws are scheduled to take effect in January 2027, after a one-year preparation period.
South Korea’s push into tokenized securities follows earlier groundwork laid by the FSC, which first released STO-related guidelines in 2023.
Implementation will be led by the FSC, working alongside the Financial Supervisory Service, the Korea Securities Depository and industry participants.
A consultation body is expected to meet as early as next month to develop supporting infrastructure, including ledger-based account management systems and additional safeguards.
Tokenized Securities Market Could Hit $2T Globally
Market forecasts suggest the opportunity could be significant. Standard Chartered previously projected that tokenized real-world assets could reach a $2 trillion market capitalization by 2028.
Separately, Boston Consulting Group estimated South Korea’s tokenized securities market alone could grow to nearly 367 trillion won ($249 billion) by the end of the decade.
Local financial groups such as Mirae Asset Securities and Hana Financial Group have already begun building platforms in anticipation of the new rules.
Last month, South Korea revealed that it is preparing one of its most aggressive crackdowns on cryptocurrency-related financial crime by expanding its travel rule requirements.
The new threshold covers transactions under 1 million won ($680), which until now allowed users to bypass identity checks by breaking transfers into smaller amounts.
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