Nikolas Sargeant
South Korea has taken a major step toward formalizing blockchain-based capital markets, as lawmakers advanced legislation creating a legal framework for issuing and trading tokenized securities, opening the door for regulated security token offerings and placing distributed ledger technology firmly within the country's existing financial system.
The National Assembly passed amendments to both the Capital Markets Act and the Electronic Securities Act during a Thursday plenary session, according to an official government release. The changes recognize tokenized securities as legitimate financial instruments and define how they can be issued, distributed, and traded under Korean law.
Under the revised framework, the Electronic Securities Act allows eligible issuers to create tokenized securities using blockchain infrastructure. Amendments to the Capital Markets Act permit those products to be traded as investment contract securities through brokerages and other licensed intermediaries.
Regulators stated the goal is to combine distributed ledger efficiencies with existing investor protections. The Financial Services Commission said the reforms are expected to improve securities account management and expand smart contract use across market infrastructure.
Officials described tokenized securities as a broad category applicable to both debt and equity products rather than a niche asset class. Government officials highlighted potential benefits for non-standard investment contracts that have historically faced distribution limits, such as securities tied to real estate, artwork, or agricultural projects.
By bringing these products under a regulated security token offering framework, authorities aim to widen investor access while maintaining oversight. Following legislative approval, the bills will move to the state council before formal promulgation by the president, a process widely expected to conclude without major changes.
The laws are scheduled to take effect in January 2027 following a one-year preparation period. South Korea's push into tokenized securities follows earlier groundwork laid by the FSC, which first released STO-related guidelines in 2023.
Implementation will be led by the FSC working alongside the Financial Supervisory Service, the Korea Securities Depository, and industry participants. A consultation body is expected to meet as early as next month to develop supporting infrastructure, including ledger-based account management systems and additional safeguards.
Market forecasts suggest significant growth potential. Standard Chartered previously projected that tokenized real-world assets could reach $2 trillion in market capitalization by 2028. Separately, Boston Consulting Group estimated South Korea's tokenized securities market alone could grow to nearly 367 trillion won ($249 billion) by decade's end.
Local financial groups including Mirae Asset Securities and Hana Financial Group have already begun building platforms in anticipation of the new regulations. Last month, South Korea revealed it is preparing an aggressive crackdown on cryptocurrency-related financial crime by expanding travel rule requirements to cover transactions under 1 million won ($680), which previously allowed users to bypass identity checks through transaction splitting.
