South Korea's Financial Services Commission announced a phased roadmap on September 4 for tokenizing securities on blockchain, beginning in February 2027 once an amendment to the Electronic Registration Act takes effect. The plan links the country's securities market to a stablecoin payment system that regulators intend to have operational by the final phase.
Three-Phase Implementation Timeline
The FSC's roadmap, presented during the third private-public consultative meeting on securities tokenization, divides the transition into three stages.
Phase one, starting in February 2027, covers privately pooled money market funds and bonds for institutional investors, unlisted stocks held through trust structures, and publicly offered fractional investment securities.
Phase two expands to include all types of publicly offered securities.
Phase three introduces an on-chain payments system tied to stablecoins. However, the FSC stated that the pace of phases two and three depends on market adoption during the initial rollout and the outcome of pending stablecoin legislation.
Regulatory Standards and Requirements
The commission published model standards for fractional investments, capping individual subscriptions at whichever is smaller between 30 million won (approximately $22,200) and 5% of an issuance. Issuers must reserve a minimum retail allocation.
Over-the-counter trading of tokenized securities will not require a separate license, though firms must consult the Financial Supervisory Service first. Retail investors face an annual cap of 100 million won (approximately $74,000) in net purchases per exchange.
Entities managing tokenized securities accounts must maintain at least 4 billion won (approximately $2.9 million) in equity and dedicated staff for account management, internal control, and IT security. The Korea Securities Depository is finalizing technical requirements that securities firms must meet before connecting to the shared ledger.
Revised rules under the Financial Services Capital Markets Act and the Electronic Registration Act are due by the end of September.
International Regulatory Concerns
The International Monetary Fund warned in an April note that tokenization eliminates settlement delays that banks rely on to manage liquidity and that give regulators time to intervene before crises develop. The IMF identified liquidity pressure, limited oversight of smart contracts, and difficulties policing cross-border assets as primary risks, suggesting that public infrastructure such as central bank digital currencies helps mitigate instability in tokenized markets.
South Korea has taken enforcement action against platforms it views as circumventing its regulations. Authorities blocked domestic access to Polymarket in August citing concerns about unlicensed gambling, joining other countries that have restricted the platform.
