FSC Proposes Rules Change to Pave Way for Tokenization of Securities Issuance and Circulation

The Financial Services Commission proposed revisions to subordinate regulations under the Financial Investment Services and Capital Markets Act (FSCMA) and the Act on Electronic Registration of Stocks and Bonds ("the Electronic Registration Act" hereinafter) to pave the way for the implementation of the tokenization of securities issuance and circulation from February 4, 2027 under the revised FSCMA and Electronic Registration Act. The revision proposals for subordinate regulations will enter a comment period from October 2 to November 11, 2026.

Key Revision Details

Revision proposals for subordinate regulations under the Electronic Registration Act

The types of securities allowed to be issued and circulated in a tokenized form will include traditional securities types, such as stocks, bonds, and funds, along with fractional investment securities in the form of non-monetary trust beneficiary certificates and investment contract securities.

To ensure credibility and continuity, distributed ledgers need to be shared across two or more account management entities (including "issuer account management entities") alongside the electronic registration entity (Korea Securities Depository). In addition, considering the public nature of distributed ledgers and the need to prevent disruptions in the confirmation of securities rights, it will be prohibited to directly charge a fee in return for the use of distributed ledgers.

For "issuer account management entities" that are issuing entities of tokenized securities but are also allowed to directly manage securities accounts for customers, the minimum equity capital requirement will be set at KRW4 billion, and they will need to have at least one account management professional, one internal control professional, and two information technology professionals.

Revision proposals for subordinate regulations under the FSCMA

There will be an additional over-the-counter (OTC) exchange licensing unit established for debt securities-alongside for unlisted stocks and non-monetary trust beneficiary certificates-since there are expectations that transactions in debt securities between retail investors may grow in the future with the tokenized circulation of debt securities.

To ensure investor protection, the maximum investment limit for retail investors will be set at an annual net purchase amount of KRW100 million on each OTC exchange.

Further Schedule

The FSC will continue to closely communicate with relevant stakeholders and listen to various opinions and industry needs regarding the policy direction on the tokenized issuance and circulation of securities.

The revision proposals for subordinate regulations under the FSCMA and the Electronic Registration Act will enter a comment period from October 2 to November 11, 2026 and go through a successive approval process thereafter before taking effect on February 4, 2027.

* Please refer to the attached PDF for details.