South Korea plans to begin putting traditional securities such as bonds, funds and selected shares on digital ledgers from February 2027, as regulators move towards a broader blockchain-based capital market
South Korea’s financial regulators have outlined a three-stage plan to introduce tokenised securities, beginning with a limited range of investment products and eventually moving towards on-chain settlement using stablecoins.
The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) said the first stage will start in February 2027, when the country’s revised securities framework takes effect.
The initial phase will cover private money-market funds for institutional investors, private bonds, unlisted shares held through trust structures and publicly offered fractional investment securities.
The plan will later expand to a wider range of publicly offered securities. The final stage would allow the securities and their payments to settle on the same blockchain-based infrastructure.
What are tokenised securities?
Tokenisation is the process of creating a digital representation of an asset on a distributed ledger, commonly known as blockchain.
In the securities market, this could mean representing ownership of a bond, fund or share through a digital token while keeping the underlying asset within the regulated financial system.
Tokenised securities are different from cryptocurrencies such as Bitcoin. South Korean regulators intend to treat them as securities and regulate them under capital-market rules.
FSC Vice Chairman Kwon Dae-young said the authorities aim to create the infrastructure needed to issue and trade a wider range of traditional securities digitally.
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Under the first stage, financial institutions will build the infrastructure needed to issue and manage tokenised securities. Brokers and other existing licensed securities firms will be able to handle tokenised products under their current licences.
Firms that manage their own securities accounts will have to meet minimum capital, information-technology and cybersecurity requirements.
For individual investors, subscriptions will be capped at the lower of 30 million won ($22,000) or 5 per cent of an issue, according to the FSC. Annual net purchases on over-the-counter exchanges will also be limited to about $74,000.
The second stage will extend tokenisation to all publicly offered securities. Regulators have not set a date for this phase. Its timing will depend on the performance of the first stage, adoption of the technology by financial institutions and progress on stablecoin legislation.
The third stage is intended to introduce on-chain settlement.
In a conventional securities transaction, the transfer of an asset and the corresponding payment may occur at different stages of the settlement process. On-chain settlement could allow both sides of the transaction to be completed on the same digital ledger.
Stablecoins could be used for the payment component. These are digital tokens designed to maintain a stable value against a currency or other reference asset.
Infrastructure already being developed
South Korea is also developing the infrastructure needed for the new system.
Koscom, a technology company affiliated with the Korea Exchange, is developing a shared tokenised-securities platform known as KoSTO. A number of securities firms have joined the platform.
The roadmap also envisages links between distributed ledgers used by financial institutions and the Korea Securities Depository, which operates key parts of the country’s existing securities infrastructure.
Several South Korean financial institutions have separately been working on tokenised funds and bonds, indicating that market participants have already begun testing potential applications of the technology.
Stablecoin rules remain a key issue
The final stage of the roadmap depends on legislation governing stablecoins.
South Korea is still developing its broader legal framework for digital assets, including rules for stablecoins backed by the South Korean won.
The FSC has said it plans to publish proposals to amend subordinate regulations by the end of September.
Until the regulatory framework for stablecoins is established, the timing of the final phase remains uncertain.
South Korea’s move comes as other financial centres in Asia and elsewhere explore tokenisation.
Japan has announced plans for blockchain-based settlement infrastructure for stocks and government bonds, while financial institutions in the United States and Europe have also been testing tokenised securities.
For South Korea, the immediate focus is the February 2027 launch. The first phase will involve a limited group of securities. Whether the system expands to the wider public market and eventually supports stablecoin-based settlement will depend on the results of that rollout, technology adoption and the country’s digital-asset legislation.
