South Korea Proposes Rules to Put Stocks, Bonds and Funds on Blockchain

TLDR

Table of Contents

South Korea plans to allow stocks, bonds and funds under its token securities rules.
Retail investors would face a 100 million won yearly net purchase cap per OTC platform.
Issuers need 4 billion won in equity capital to manage their own token accounts.
KB Securities, Kakaopay Securities and Hanwha are already building tokenization products.
Public comments run Oct. 2 to Nov. 11, and the laws take effect Feb. 4, 2027.

South Korea has proposed new rules that would let stocks, bonds and funds be issued as tokens on blockchain networks. The plan comes from the Financial Services Commission, the country’s top financial regulator.

The proposal sets out which securities can be tokenized, what issuers must do and how over-the-counter trading will work. It prepares for changes to the Electronic Securities Act and Capital Markets Act that take effect on Feb. 4, 2027.

Earlier rules and pilot programs focused mostly on fractional investment products. These included non-monetary trust beneficiary certificates and investment contract securities.

Stocks and Bonds Join South Korea’s Token Rules

The FSC treats a token security as a securities format built on a distributed ledger. It is not a separate class of crypto asset, so existing capital market rules still apply.

Not all securities will move onchain at once. The first stage, starting in February, covers privately placed money market funds and bonds for institutional investors, trust-based tokenization of unlisted shares and publicly offered fractional investment securities.

Publicly offered traditional securities will come in a later stage. The FSC has not set a date for that step.

The final stage would link tokenized securities with onchain payment systems, possibly including stablecoins. Timing depends on the earlier phases, technology and stablecoin laws that are still being written.

Retail Investors Face a Trading Cap

Ordinary investors would be limited to 100 million won, about $73,700, in yearly net purchases on each token securities OTC platform. The limit applies separately to each platform.

New OTC license types will cover debt securities, unlisted shares and non-monetary trust beneficiary certificates. Approved venues must watch for unfair trading and can face penalties, account limits and other sanctions for violations.

Non-financial companies could also manage accounts for the securities they issue. To qualify, a company needs at least 4 billion won in equity capital.

It must also employ one account management specialist, one internal control specialist and two IT specialists. Its systems must meet cybersecurity and operating standards.

Distributed ledgers used for these securities must connect with the Korea Securities Depository. The first stage will use a hybrid model, with some shareholder rights still handled by existing systems.

Several Korean firms are already preparing. In September, KB Securities signed a deal with Securitize and the Optimism Foundation to build tokenized funds for institutions, starting with a money market fund.

On Sept. 29, Kakaopay Securities and Dinari announced a project to study tokenizing Korean-listed shares for eligible overseas investors. No Korean stock has been issued through the partnership yet.

Hanwha Investment & Securities has reportedly finished a platform that supports Avalanche and Hyperledger Besu. Samsung SDS is building infrastructure for the Korea Securities Depository.

Eugene Investment & Securities and BEATOZ also agreed to test stablecoins for token securities subscriptions. They want to see if subscription, payment and settlement can run through one blockchain process.

The public comment period runs from Oct. 2 through Nov. 11. After that, the rules need FSC approval, a review by the Ministry of Government Legislation and Cabinet consideration before taking effect on Feb. 4, 2027.

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