South Korea targets to launch tokenized securities market in 2027

South Korea announced a three-phase roadmap for tokenization of securities, the final phase will achieve on-chain payment settlement with stablecoins.

The South Korean government has formulated a three-phase plan to include stocks, bonds and funds into tokenization infrastructure. The final phase of the plan will connect securities clearing with an on-chain payment system based on stablecoins.

According to the plan, South Korea will officially launch the expansion of tokenized securities in February 2027, which will initially cover selected funds, bonds, unlisted stocks and share investment products. The second phase will open tokenization applications to all publicly issued securities, while the final phase will introduce on-chain payment infrastructure linked to stablecoins.

The Finance Commission said on Friday that with the amendment to the Electronic Registration Law taking effect on February 4, 2027, the roadmap will officially kick off. This move will not only expand the scope of tokenization from share investment products to a wider range of traditional securities, but will also provide a legal way to issue and manage conventional securities through distributed ledgers.

Phased implementation path

Vice Chairman of the Finance Committee Kwon Daying announced the policy at the third public-private consultation meeting attended by experts from the Financial Supervisory Authority, financial institutions, industry associations and the private sector. Authorities plan to build the system in stages, starting with limited securities and institutional products, then opening it up to public offerings, and eventually connecting the market to the stablecoin settlement system.

"The authorities will be committed to laying the foundation to promote the tokenized issuance and circulation of more traditional types of securities, including stocks, bonds and funds," Kwon Daying said. He described a long-term capital market regulatory infrastructure upgrade plan to achieve digital connectivity.

Phase 1: Starting in February 2027

In the first phase, private pooled money market funds and bonds purchased only by institutional investors will be eligible for tokenization. In addition, unlisted stocks issued through trust structures and publicly issued share investment securities will also be included in the initial framework.

This rollover is based on an amendment passed by the South Korean National Assembly in January this year that recognizes the status of distributed ledgers as a securities registry while ensuring that tokenization tools comply with existing South Korea's securities laws and regulations. Previous reports pointed out that regulators are developing standards covering issuance, trading and settlement, and relevant tokenized securities rules are expected to take effect in February 2027.

While the legal framework is being established, the technical infrastructure is also under intensive preparation. Samsung SDS won the bid earlier this year to develop a token securities platform for the Korean Securities Depository Corporation (KSD), and the expected completion time roughly coincides with the amendment's effective time. The system is expected to connect KSD's existing electronic securities account infrastructure with blockchain records, covering issuance, circulation inspection, rights management and monitoring.

Phase 2: Full opening up

The second phase will open tokenization to all publicly issued securities. Regulators have not yet set a specific start date because the progress of implementation will depend on the results of the first phase and the speed at which financial institutions adopt the required technology.

Phase 3: stablecoin settlement layer

Phase 3 will introduce on-chain payment infrastructure linked to stablecoins to move the cash portion of securities transactions to the digital track. The specific timing still depends on the progress of pending stablecoin legislation and the results of the early tokenization stage. South Korean lawmakers have been individually advancing the Digital Assets Framework Act, which is expected to cover stablecoin issuance and other areas of the digital asset market. The Finance Committee said in August that it would speed up the consultation process on the bill with a view to completing the framework during the fall session. The stablecoin rule has been one of the major unresolved parts of South Korea's digital asset regulation project.

It is worth noting that tokenized settlements have been tested outside of the unplanned securities framework. Another independent project in South Korea has expanded the deposit token pilot to nine banks, and Bank of Korea is also studying using tokenized bank deposits as settlement funds for tokenized bonds and stocks. Before the law is officially implemented in 2027, private financial institutions are also conducting their own experiments. For example, Shinhan Asset Management Co., Ltd. recently signed an agreement to test the use of the Solana network for the operation of won denominated tokenized funds, covering proof-of-concept functions such as investor verification, issuance, distribution and on-chain liquidity.

Retail investment restrictions and compliance requirements

In order to welcome more securities into distributed ledgers, the Financial Commission's roadmap sets investment limits and operating requirements.

• Individual subscription limit: For non-monetary trust beneficiary rights certificates, the maximum individual subscription amount is 30 million won (approximately US$22,000) or 5% of the total issued amount, whichever is lower. Regulators want the allocation of public offerings to include a reserved portion for retail investors to participate, and the minimum amount needs to be distributed equally.
• Annual net purchase cap for over-the-counter (OTC): Retail investors using OTC exchanges must not make annual net purchases on each OTC platform exceed 100 million won (approximately US$74,000).

In terms of qualifications, existing financial investment companies do not need to obtain separate authorization solely for processing tokenized securities. Companies that have been licensed for relevant financial activities can operate within their existing permitted business scope. However, intermediaries handling tokenized securities in the over-the-counter market need to consult with the Financial Supervisory Authority in advance.

The authorities plan to introduce a new licensed class for over-the-counter debt securities to supplement the existing classes of unlisted stocks and non-monetary trust beneficiary rights certificates. As tokenization evolves, the Financial Commission expects debt securities trading to become more common.

Issuers can also operate through the new "issuer account management entity" structure. Companies approved under the system can manage their own securities accounts without having to rely entirely on financial institutions. Applicants must maintain a share capital of at least 4 billion won (nearly US$3 million). Staffing requirements include personnel, who is responsible for account management and internal controls, and two employees dedicated to computer and IT systems. Issuers must also meet specific cybersecurity and technical standards.

Korea Securities Custody Corporation has prepared screening criteria for distributed ledgers used by securities companies. The tests will cover core distribution and circulation functions, as well as emergency procedures for system failures and other interruptions.

Exploration of blockchain settlement in Asian markets

South Korea's plans are developing in parallel with blockchain settlement projects in other parts of Asia.

Japan is studying a system that hopes to eventually process publicly traded stocks and Japanese government bonds on blockchain infrastructure 24/7. The Financial Services Agency, the Ministry of Finance, Japanese banks and financial institutions are expected to participate, with preliminary development plans targeted for early 2027 and likely to be operational in the 2030s. Japanese agencies have begun testing certain parts of the model. Four companies from Mitsubishi UFJ Financial Group launched a proof of concept in August this year to test Japanese government bond repurchase settlement on the Canton network to examine automated processing and 24-hour settlement capabilities. Tokenized deposits or stablecoins are being considered for the payment side of these transactions.

According to the cited OECD report, Asia accounted for 30% of global stablecoin trading activity in 2025 and recorded the highest growth rate of regional crypto activity. Financial Commission data shows that South Korea itself has 11.3 million real-name cryptocurrency users, which provides regulators with a huge domestic digital asset market that has huge potential as the securities framework moves towards the implementation stage.

The Finance Committee plans to issue draft sub-regulations under the proposed revision of the Financial Investment Services and Capital Markets Law and the Electronic Registration Law before the end of September this year. Before the first phase begins in February 2027, securities firm Korea Securities Depository Co., Ltd. will start building the required infrastructure.