South Korea will fully digitize its securities market by 2027 through blockchain tokenization

Key Highlights

• The first batch of pilot plans will be launched in February 2027
• With blockchain native stablecoin settlement as the final vision

The Korea Financial Commission (FSC) has announced a comprehensive strategy to digitize all securities in the capital market through tokenization. The first batch of pilots will be launched on February 4, 2027 and will be mainly for institutional investors, covering money market funds, corporate bonds and unlisted equity. The second phase will expand the scope of tokenization to all publicly issued securities after the successful implementation of the first phase. The third stage is to establish a native stablecin settlement infrastructure based on blockchain. Currently licensed dealers can trade tokenized securities without applying for additional regulatory approval.

South Korea releases comprehensive capital market digitization roadmap

South Korean financial authorities have released a detailed roadmap outlining their vision of digitizing the country's complete capital market infrastructure through tokenization technology, covering everything from private corporate debt to publicly traded stocks and ultimately achieving a stablecoin-based settlement system.

On September 4, the Korea Financial Commission (FSC) and the Financial Supervisory Authority (FSS) officially announced this strategic move at the third meeting of the Tokenized Securities Advisory Committee. Currently, South Korea has 11.3 million verified cryptocurrency users, and its average daily trading volume on the stock market is comparable to that of major cryptocurrency exchanges.

The first batch of pilots is scheduled to be launched in February 2027

The first phase will be launched on February 4, 2027, when the revised version of South Korea's Electronic Registration Law takes effect. The legislative framework will provide legal recognition for securities recorded on the blockchain.

In the early stages, private money market funds and private corporate bonds for institutional investors will be the first to be tokenized. Unlisted equity will also be digitized using a trust framework, where the original shares remain in the traditional registration system and investors hold tokenized trust beneficiary rights certificates.

Retail market participants trading on over-the-counter trading platforms have an annual net acquisition cap of 100 million won (approximately US$74,000) per trading venue. Individual subscription amounts are limited to 30 million won (approximately US$22,000) or 5% of total issuance, whichever is lower.

Blockchain-native stablecoin settlement marks the ultimate vision

After the successful implementation of the first phase, the second phase will extend tokenization eligibility to all publicly issued securities. The deployment timetable for the second and third phases depends on the performance indicators for the first phase and upcoming stablecoin regulatory legislation.

The third and final phase will establish a blockchain-based payment infrastructure that will allow investors to use stablecoins to settle tokenized securities transactions.

The Finance Committee cited BlackRock's BUIDL tokenized fund and Hong Kong's tokenized green bond initiative as benchmark examples for the project.

Non-bank entities that want to operate investor accounts for their own token securities must maintain a minimum capital of 4 billion won (approximately US$3 million) and be staffed with dedicated compliance and information technology personnel. Currently licensed brokerages and trading entities can promote tokenized securities trading without additional licenses. OTC trading platforms must obtain advice from the Financial Supervisory Authority before starting operations.

The Finance Committee said it plans to submit proposals to amend subsidiary legislation by the end of September.

South Korea's move follows Japan's plans announced last week to build a nationwide blockchain settlement infrastructure for stocks and government bonds, with the goal of deployment in the early 2030s. Singapore also finalized its stablecoin licensing framework this week.

The Finance Committee said its overall goal is to completely transform the capital market infrastructure to achieve digital connectivity.