South Korea’s FSC proposes rule changes to widen tokenized securities scope

South Korea’s Financial Services Commission, or FSC, has issued a notice of proposed revisions to lower-level rules tied to the institutionalization of token securities. The proposal would broaden the range of assets eligible for tokenization by bringing traditional securities such as stocks, bonds, and funds into scope. Under the draft, tokenization would no longer be limited to fractional investment securities, including non-monetary trust beneficiary certificates and investment contract securities, as traditional securities would also be allowed to be issued in tokenized form. The proposed revisions also address the electronic securities framework. They would set out distributed ledger requirements, require participants to include an electronic registration institution and at least two account management institutions, and bar the use of direct payments for distributed ledger services when used for electronic registration purposes.