- South Korea moves to expand tokenisation into mainstream capital markets.
- Three-phase plan expands from bonds to public assets, enabling stablecoin settlements.
- The first phase begins in February 2027, when the new legal framework will take effect.
South Korea is getting ready to take tokenization beyond niche fractional investments and bring it into the mainstream of capital markets.
The country’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have laid out a three-phase plan to build infrastructure for issuing and trading tokenized stocks, bonds, and funds using blockchain technology.
The first phase is set to start in February 2027, when the new legal framework will go into effect.
Until now, most of the discussion around security token offerings in the country has been about fractional investing. Meaning, dividing ownership of assets like real estate, music royalties, or other alternative assets into smaller units that people can invest in.
Vice Chairman Kwon Dae-young of the FSC said South Korea wants to build the foundation for tokenizing and trading traditional financial products.
The long-term goal is even more ambitious, with the country wanting to link issuance, trading, clearing, settlement, and investor rights into one connected digital system.
South Korea Will Roll Out Tokenization in Three Phases
The first phase will initially cover private money market funds and corporate bonds for institutional investors, along with unlisted stocks and publicly offered fractional investment securities.
Following that, the second phase will expand the system to cover publicly offered securities, which may eventually open the door to tokenizing a much wider range of mainstream financial assets.
Lastly, the third phase is especially important for the crypto industry, since South Korea wants to eventually enable stablecoins and other digital assets to be used as payment methods for settling transactions on-chain.
Regulators haven’t yet decided on a fixed timeline for the later phases, because it all depends on how well the first phase goes and how stablecoin legislation progresses.
What Does This Mean for Investors?
The move doesn’t mean South Korean investors will be buying every stock on the market through a blockchain wallet next year.
The rollout is starting small, with institutional products and a limited set of securities. Plus, retail investors will also face proposed investment limits.
Under the proposed rules, there’s a yearly net purchase cap of 100 million won (approximately $74,000) per OTC exchange, and some fractional investment products could come with individual limits of 30 million won (roughly $22,000) or 5% of the total offering.
Another important detail is that instead of creating a whole new licensing system, the government plans to let some existing licensed securities firms handle tokenized securities.
Related: South Korea to Propose Stablecoin Consolidation Bill
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
