South Korea's Financial Services Commission on October 1, 2026, published draft subordinate regulations that would permit the tokenized issuance and trading of stocks, bonds, and investment funds on distributed ledgers. The public comment period runs from October 2 through November 11, 2026. If a...
South Korea's Financial Services Commission on October 1, 2026, published draft subordinate regulations that would permit the tokenized issuance and trading of stocks, bonds, and investment funds on distributed ledgers. The public comment period runs from October 2 through November 11, 2026. If adopted on schedule, the rules take effect February 4, 2027, when amendments to the Capital Markets Act and the Electronic Registration of Stocks and Bonds Act become law.
The framework opens a path to tokenize securities within a capital market valued at approximately $5 trillion — comprising a $2.95 trillion equity market (Korea Exchange, January 2026) and a $1.93 trillion bond market (Asian Bonds Online, September 2026). South Korea becomes the first major Asian economy to embed blockchain-based securities registers into its core capital markets statute rather than operating under sandbox exemptions. The STO-related bill passed the National Assembly on January 15, 2026, ending a three-year regulatory sandbox regime in place since February 2023.
Three Korean brokerages — Hanwha Investment & Securities, KB Securities, and Eugene Investment & Securities — have already built or contracted tokenization infrastructure on Avalanche, OP Mainnet, and Hyperledger Besu respectively. The Korea Securities Depository is building interoperability infrastructure that connects with Avalanche, Hyperledger Besu, and Hyperledger Fabric. FSC Chairman Lee Eok-weon met with senior officials from Nasdaq, DTCC, and Hong Kong Exchanges and Clearing on September 29, 2026, to discuss tokenized securities architecture and T+1 settlement transitions.
The FSC's proposed rules amend implementing regulations under two statutes: the Financial Investment Services and Capital Markets Act ("Capital Markets Act") and the Act on Electronic Registration of Stocks and Bonds ("Electronic Securities Act"). Both parent laws were revised by the National Assembly on January 15, 2026, to legally recognize distributed ledgers as securities registers. The subordinate rules now under consultation provide the operational detail.
The framework extends eligibility beyond the fractional investment products permitted under the prior sandbox. Conventional instruments — equities, fixed-income securities, and fund units — become eligible for tokenized issuance. Fractional investment securities structured as non-monetary trust beneficiary certificates or investment contract securities remain included.
A structural distinction sets South Korea's approach apart from most jurisdictions: tokenized securities are governed under the same Capital Markets Act that covers traditional securities. There is no parallel "digital asset" licensing track. Existing holders of a financial investment business license require no additional authorization to issue tokenized securities, according to the draft rules.
The FSC views distributed ledger infrastructure as "public in nature." The draft regulations prohibit account management entities from charging fees for ledger usage. This provision effectively treats the blockchain layer as regulated market infrastructure rather than a commercial service.
The FSC outlined a three-stage deployment. Each phase expands the scope of eligible instruments and infrastructure capabilities.
Phase 1 (February 4, 2027): The initial launch covers four product categories:
Phase 1 deliberately limits scope to products with existing institutional demand and lower retail-risk profiles. The exception is fractional securities, which serve retail investors but have operated under the sandbox since 2023.
Phase 2 (timeline undetermined): Extension to all publicly offered securities, including listed stocks and government bonds. This phase requires expanded OTC exchange infrastructure and broader clearing arrangements.
Phase 3 (timeline undetermined): Integration of blockchain-based payment and settlement systems. This phase depends on separate domestic stablecoin legislation that has not yet been introduced. Phase 3 would enable end-to-end on-chain settlement — issuance, trading, clearing, and payment — within a single infrastructure layer.
The FSC has not committed to dates for Phases 2 and 3. Phase 2 timing depends on Phase 1 operational performance. Phase 3 depends on legislation that does not yet exist.
The draft rules impose capital, staffing, and investor-protection requirements:
Issuer account managers — entities that issue tokenized securities and maintain customer accounts — must hold minimum equity capital of KRW 4 billion (approximately $2.9 million at current exchange rates). Required personnel: one account management professional, one internal control professional, and two IT professionals.
Distributed ledger requirements: Each ledger must involve at least two account management entities plus the Korea Securities Depository. This multi-party requirement prevents any single issuer from controlling its own securities register.
Retail investor caps: Individual retail buyers face an annual net purchase limit of KRW 100 million (approximately $72,000) per licensed OTC exchange. Net purchases are calculated as total purchases minus total sales within each calendar year. The cap applies per exchange, meaning an investor with access to multiple OTC venues could theoretically exceed the per-platform limit in aggregate.
Asset pooling: The FSC reversed a December 2023 ban on asset pooling for fractional investments. Under the new rules, pooling of the same asset type is permitted, which industry participants had lobbied for as necessary to achieve adequate liquidity in tokenized markets.
Fraud enforcement: Standard Capital Markets Act penalties apply, including criminal charges, fines, account freezes, and executive restrictions. Tokenized securities receive no enforcement carve-outs.
Three competing infrastructure stacks have emerged among Korean brokerages, each built before the regulations were finalized.
Hanwha Investment & Securities began building a tokenized securities platform with blockchain firm FairSquare Lab in 2025. The completed system supports Avalanche and Hyperledger Besu. Hanwha, part of a conglomerate with approximately $200 billion in assets, designed the system for multi-network operation. On Avalanche, institutions can establish dedicated subnets with controls over participation and validators. Hyperledger Besu provides an Ethereum-compatible enterprise option. The platform was reported complete as of September 2026.
KB Securities signed a memorandum of understanding with Securitize and the Optimism Foundation on September 23, 2026, to bring tokenized funds to Korean institutional investors on OP Mainnet. The initial product pipeline includes a tokenized money market fund and a fund based on a KB Asset Management flagship strategy. KB Securities sponsors and distributes the products; Securitize provides tokenization, fund administration, and transfer-agent infrastructure; Optimism provides the L2 settlement layer. KB Securities is also exploring whether existing tokenized funds from global asset managers could be offered to Korean institutions.
Eugene Investment & Securities signed an agreement with blockchain company BEATOZ to test stablecoin settlement for tokenized securities subscriptions. Eugene built its tokenization platform in 2024 and participated in a Korea Securities Depository tokenization pilot in 2025. The firm is also part of Hana Financial Group's consortium developing a Korean won-denominated stablecoin — work that could feed directly into Phase 3 infrastructure.
Korea Securities Depository (KSD) sits at the center of the infrastructure build. As the nation's central securities depository, KSD is preparing connectivity infrastructure that interfaces with Avalanche, Hyperledger Besu, and Hyperledger Fabric. Avalanche was included based on demand from firms in a tokenized securities working group. KSD's multi-chain approach gives securities companies several blockchain options while maintaining a centralized registration layer as required by law.
FSC Chairman Lee Eok-weon's September 29 meeting with Nasdaq Vice Chairman Bob McCooey, DTCC Chief Risk Officer Timothy Cuddihy, and HKEX Managing Director Yu Tae-seok signals South Korea's intent to align its tokenized securities infrastructure with global clearing and settlement standards.
Discussion topics included U.S. and Hong Kong experience with tokenized securities development, the transition to T+1 settlement (which the U.S. completed in May 2024), market-segment separation, and delisting rules. The meeting suggests South Korea is studying how tokenized settlement infrastructure could accelerate its own settlement cycle, which currently operates on T+2 for most securities.
The meeting also reflects a broader pattern: regulators in Asia-Pacific markets are consulting with each other and with Western exchange operators to avoid fragmented standards that would impede cross-border tokenized securities flows.
South Korea's framework arrives amid an acceleration of tokenized securities regulation across Asia.
Hong Kong granted its first two stablecoin issuer licenses on April 10, 2026, to Anchorpoint Financial and HSBC, out of 36 applicants. The Stablecoins Ordinance took effect August 1, 2025. The Hong Kong Monetary Authority has also conducted tokenized green bond issuances.
Japan has three active stablecoin issuer pathways: JPYC (funds-transfer model), JPYSC (trust bank model), and a megabank stablecoin due by March 2027. Japan's Financial Services Agency published a 2025 discussion paper on crypto asset classification and market structure.
Singapore published draft legislation on September 1, 2026, to incorporate its stablecoin framework into the Payment Services Act, with consultation closing October 16, 2026. The Monetary Authority of Singapore finalized its stablecoin regulatory framework in August 2023.
A common principle across these jurisdictions: tokenized securities must operate within the same investor-protection and market-integrity standards applied to traditional instruments. None have created separate "crypto" licensing tracks for tokenized versions of regulated securities.
South Korea's framework is distinct in one respect: it is the first in the region to pass primary legislation recognizing distributed ledgers as securities registers at the national level, rather than operating through regulatory guidance, sandboxes, or licensing overlays.
The global tokenized securities market was valued at approximately $7.93 billion in 2026, according to Business Research Insights. Boston Consulting Group projects tokenized real-world assets reaching $16 trillion in AUM by 2030. McKinsey's estimate is more conservative at $2 trillion to $4 trillion by decade-end. The disparity reflects different scope definitions and adoption assumptions.
South Korea's framework reshapes the distribution of economic value in securities markets along several axes.
Settlement compression: Moving from T+2 to near-instant on-chain settlement reduces counterparty risk and capital lockup. For a $5 trillion market, even marginal improvements in settlement efficiency free significant capital. The framework's multi-phase approach, however, means full settlement benefits depend on Phase 3 stablecoin integration that lacks a timeline.
Infrastructure fee structure: The FSC's prohibition on ledger usage fees prevents blockchain infrastructure operators from extracting rent at the base layer. This contrasts with public blockchain models where transaction fees accrue to validators. The regulation effectively socializes infrastructure costs, treating the ledger layer as a utility rather than a profit center.
Intermediary displacement risk: Existing financial investment license holders face no additional authorization requirements. This protects incumbents but may limit entry by blockchain-native firms. The KRW 4 billion capital requirement for issuer account managers sets a floor that excludes smaller fintech players.
Retail access constraints: The KRW 100 million annual purchase cap per OTC exchange limits retail participation in early phases. For context, South Korea's average household financial assets were approximately KRW 300 million in 2025, making the cap meaningful but not prohibitive for middle-income investors.
Cross-border value flows: The FSC's engagement with Nasdaq, DTCC, and HKEX suggests eventual cross-border interoperability. If South Korean tokenized securities become accessible to foreign investors through connected clearing infrastructure, the value capture dynamics shift significantly — potentially drawing foreign capital flows that currently bypass Korean markets due to settlement friction.
South Korea has moved from sandbox experimentation to statutory commitment. The January 2026 legislation and October 2026 draft rules create a legal foundation for tokenizing securities within a $5 trillion capital market. The infrastructure race among Hanwha, KB Securities, and Eugene Investment — each backed by different blockchain stacks — is already underway, as is the Korea Securities Depository's multi-chain build.
The framework's economic design is conservative: ledger fees are prohibited, retail caps are imposed, and capital thresholds exclude smaller entrants. Phase 1 limits scope to lower-risk institutional products and existing fractional securities. The most consequential feature — stablecoin-based settlement that could eliminate the T+2 cycle — sits in Phase 3 without a timeline or enabling legislation.
The question is not whether South Korea will tokenize its capital markets. The legislation is passed, the rules are drafted, and the infrastructure is built. The question is how quickly Phases 2 and 3 deliver on the promise of a fully digital capital market, and whether the conservative design choices — retail caps, fee prohibitions, incumbent protections — accelerate or constrain adoption. The FSC's engagement with Nasdaq, DTCC, and HKEX suggests it is already thinking beyond domestic deployment, but cross-border interoperability requires standards that do not yet exist.