South Korea’s Financial Services Commission has proposed detailed regulations governing the issuance and trading of tokenized securities, with the framework scheduled to take effect in February 2027. The proposal allows stocks, bonds, funds, and certain fractional investment securities to be issued and circulated in tokenized form. It introduces specific operational requirements for companies issuing these securities while directly managing customer accounts, mandating at least 4 billion Korean won ($2.8 million) in equity capital and dedicated compliance and technology staff.
Separately, revisions to capital markets regulations would establish an additional over-the-counter exchange license for debt securities and cap retail investors at 100 million won ($70,000) in annual net purchases on each OTC exchange. This proposal builds on a three-phase roadmap unveiled on September 4 for migrating securities issuance and trading onto distributed-ledger infrastructure. The rules will undergo public consultation from Friday through November 11 before entering the approval process, with final implementation set for February 4, 2027, alongside amendments recognizing distributed ledgers as valid infrastructure for securities circulation.
The introduction of explicit capital thresholds and staffing mandates signals a shift from experimental sandboxing to regulated institutional participation in South Korea’s digital asset market. By requiring $2.8 million in equity capital and dedicated compliance personnel, regulators are filtering out undercapitalized entities, thereby reducing systemic risk associated with custody and account management failures. This structural gatekeeping aims to ensure that only firms with robust operational capabilities can issue tokenized securities, aligning traditional financial safeguards with blockchain-based distribution methods.
Retail position limits on OTC exchanges represent a critical mechanism for managing liquidity risks and preventing excessive exposure during the early stages of market formation. Capping annual net purchases at $70,000 per investor suggests authorities prioritize stability over immediate volume growth, allowing the market structure to mature without overwhelming volatility. Stakeholders should monitor how these constraints influence secondary market depth and whether they inadvertently drive activity toward unregulated platforms or offshore jurisdictions.
