South Korea is accelerating its push into blockchain-powered finance. The Financial Services Commission (FSC) has introduced a policy roadmap aimed at modernizing securities issuance and trading through tokenization, marking a significant step toward digital capital markets. Under the three-step plan, stocks, bonds, and funds would move onto blockchain infrastructure, with new legislation recognizing tokenized securities taking effect from 2027 and onchain settlement with stablecoins integrated into the long-term scheme.

The move places South Korea alongside other financial hubs, including Singapore, Hong Kong, and Switzerland, that have launched regulated tokenized securities initiatives in recent years, as global institutional interest in bringing traditional financial assets onto distributed ledgers grows.

Tokenized Securities Expansion Begins in 2027

The roadmap is tied to amendments to the Electronic Registration Act, which will officially recognize tokenized securities as a digital form of traditional securities starting February 4, 2027.

The first phase will target money market funds, bonds, exchangeable unlisted stocks (EUSTs) through trust structures, and publicly large-selling fractional stock sales. This phase is designed to evaluate market structures and operational processes before moving on to broader adoption of tokenization across various financial products. It builds on earlier domestic pilots, such as tokenized won-backed commercial paper and fund distribution trials conducted by major Korean banks and brokerages under the country's regulatory sandbox and a joint industry tokenization project launched in 2023.

Stocks, Bonds, and Funds Move Onchain

The new roadmap applies to mainstream securities, distinguishing it from earlier tokenization projects that focused primarily on fractional ownership.

The second stage would see all publicly listed stock, bond, and investment fund securities covered by tokenization. Blockchain infrastructure could add value through more efficient issuance and tracking of chain of custody, while still allowing for regulatory control.

New Investor Protection Measures

Authorities have also issued model standards for fractional investment products to support market development.

Under the proposed framework, individual subscriptions can be capped at the lesser of (i) KRW 30 million or (ii) 5% of the total issuance volume. Regulators also suggest that a small portion of public issues be reserved for retail investors to ensure fair participation.

If adequate investor protection is in place, future receivables could also be integrated into tokenized structures.

Stablecoins Included in Long-Term Strategy

The standout feature of the roadmap is the inclusion of stablecoin-related settlement infrastructure in the final stage.

The FSC envisions a system where issuance, trading, record-keeping, and settlement all take place on interwoven blockchain systems. However, implementation depends on market adoption, infrastructure readiness, and future stablecoin legislation — legislation that remains under discussion in the National Assembly, where multiple competing stablecoin bills have been proposed.

The timeline for later phases remains flexible, allowing regulators to assess the outcomes of the initial phase before rolling out and expanding the framework.

Infrastructure Development Moves Ahead

New guidance is available on distributed ledger standardization, cybersecurity standards, operational resilience, and business continuity planning. Capital, staffing, and technology will also be required of entities maintaining tokenized securities accounts.

By the end of September, the FSC will share updated versions of the related regulations to provide clarity for the market before the first phase commences in early 2027. Market participants will be watching these drafts closely, as the detailed rules will determine how banks, brokerages, and exchanges position themselves ahead of the 2027 start.

Source: FSC announcement; via CryptoNinjas