South Korea’s Financial Services Commission said on Oct. 1 that amendments related to tokenized securities under the Electronic Securities Act and the Capital Markets Act will take effect on Feb. 4, 2027. Draft revisions to the enforcement decrees and related rules will be open for public notice from Oct. 2 through Nov. 11.
The draft sets out which securities may be tokenized, the requirements for distributed ledgers, and investment limits for retail investors using over-the-counter trading venues.
Stocks, bonds, and funds included in tokenized securities scope
Under the draft enforcement rules for the Electronic Securities Act, the scope of securities that may be issued as tokenized securities extends beyond fractionalized investment securities. It also covers beneficiary certificates of non-monetary trusts, investment contract securities, and existing standardized securities such as stocks, bonds, and funds.
The proposal also defines participation requirements for distributed ledgers. In addition to an electronic registration institution, at least two account management institutions must take part. The FSC said the requirement is intended to improve the reliability of ledger information and support business continuity in emergency situations.
The commission added that because the distributed ledger will serve as a public book, and to avoid delays in confirming rights, the draft prohibits direct payment of ledger usage fees for electronic registration.
Issuers may act as account managers under set thresholds
The draft allows securities issuers to serve as account management institutions themselves. Registration requirements include minimum equity capital of KRW 4 billion, at least one account management specialist, one internal control specialist, and two information systems specialists.
OTC venues gain a debt securities category
The draft enforcement rules for the Capital Markets Act govern over-the-counter trading venues used for tokenized securities distribution. The FSC said demand among retail investors for bond trading is currently limited, but added that expectations around tokenization changing the bond distribution market were taken into account.
As a result, the permitted OTC categories would no longer be limited to unlisted stocks and beneficiary certificates of non-monetary trusts. Debt securities would also be added.
To protect investors, the annual investment cap for retail investors at each OTC venue would be calculated on a net purchase basis, meaning total purchases minus total sales. The ceiling is set at KRW 100 million per year for each venue.
Industry feedback to be reviewed during legislation
The FSC said the draft incorporates the parts of the "policy direction for tokenized securities" released at the third public-private tokenized securities consultative meeting on Sept. 4 that belong in enforcement rules.
According to the commission, opinions will be collected during the notice period, and industry comments on the policy direction will also be discussed during the legislative process. Examples cited in the press release include raising the KRW 100 million annual net buying cap for retail investors at OTC stock venues, lowering the KRW 4 billion minimum equity capital requirement for issuer account management institutions, and easing distributed ledger requirements.
After the notice period ends, the amendments must still go through an FSC resolution, a legal review, a vice ministers’ meeting, and a State Council resolution. The commission expects the rules to take effect alongside the law on Feb. 4, 2027.
ABMedia also noted that Chain News had previously reported that Hanwha Securities is building a tokenized securities platform on Avalanche for the 2027 framework.