South Korea unveils regulatory framework to oversee issuance and trading of tokenized securities

South Korea has intensified its push into the crypto sector amid intensifying competition, unveiling a regulatory framework to oversee the issuance and trading of tokenized securities. The move is part of a broader shift towards blockchain-based securities within the country’s financial system.

Reports highlighted that this upgrade plays a crucial role in promoting economic stability and fostering sustainable development while safeguarding the country’s citizens as they engage in the crypto market. For instance, it enables the issuance of compliant security token offerings (STOs) and solidifies distributed ledger technology within South Korea’s existing financial framework. 

Meanwhile, an official government announcement confirmed that the National Assembly approved adjustments to both the Capital Markets Act and the Electronic Securities Act during a plenary session.

It is worth noting that under the Korean law, such updates recognize tokenized securities as legitimate financial instruments and define how they can be issued, distributed, and traded.

South Korea undertakes a massive regulatory step in the crypto ecosystem 

Following the establishment of the new framework, sources familiar with the situation said the Electronic Securities Act will allow qualified issuers to develop tokenized securities using blockchain technology. Moreover, the amended Capital Markets Act classifies these products as tradeable investment contract securities via brokerages and other licensed intermediaries. 

With these enhancements in place, reports highlighted that regulators seek to integrate the operational efficiencies of distributed ledgers with established investor protection frameworks.

According to the Financial Services Commission, these reforms will improve the oversight and handling of securities accounts. It will also boost the adoption of smart contracts in market infrastructure, the government agency said.

To further break this point down for better understanding, these officials asserted that the scope of tokenized securities extends across various asset classes, including both debt and equity products, rather than being confined to a specialized asset class. 

Another significant milestone was noted when a government representative disclosed the potential advantages of non-standard investment contracts that have experienced supply chain inefficiencies in the past. Examples of these contracts include those linked to real estate, art, or agricultural initiatives.

Several analysts commented on these updates in South Korea. They argued that authorities subjected these products to a regulated STO framework to expand investor access without compromising compliance or risk management.

After this process is finalized, the new law is expected to be enacted in January 2027, following a 12-month preparation period. Notably, South Korea’s tokenized securities project is an extension of earlier efforts displayed by the FSC. At this time, the regulatory agency had published STO-related rules.

Still, the FSC is assigned the role of heading the implementation of the new law. To make this implementation a success, the agency will team up with the Financial Supervisory Service, the Korea Securities Depository, and industry stakeholders. 

South Korean citizens expressed excitement about the upcoming regulations

To establish a supportive infrastructure comprising secure ledger-based account management systems, a consultation group has scheduled a crucial meeting as early as February. 

Standard Chartered’s estimate suggests that tokenized real-world assets could reach a new record of $2 trillion in market value by 2028. 

In a separate report, Boston Consulting Group, a premier global management consulting firm, predicted that South Korea’s tokenized securities market will expand to almost 367 trillion won or $249 billion by the end of the decade.

In the meantime, local financial companies like Mirae Asset Securities and Hana Financial Group publicly announced that they have already initiated several efforts to develop platforms as they await the upcoming regulations.

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