South Korea’s Tokenized Securities Framework Charges Ahead as Crypto Regulation Intensifies

Seoul isn't just talking about digital assets—it's building the rails. The country's latest push for a tokenized securities framework marks a decisive turn from speculative chaos toward institutional-grade infrastructure.

The Regulatory Engine Revs Up

Forget the wild west. South Korean authorities are methodically drafting rules that could legitimize tokenized stocks, bonds, and funds on-chain. This isn't about enabling crypto bros—it's about cutting settlement times, bypassing legacy custodians, and unlocking liquidity trapped in traditional finance. Watch for the Financial Services Commission to drop draft legislation that makes Wall Street's plumbing look antique.

Why This Move Matters Now

Global asset managers are starving for yield and efficiency—two things traditional markets struggle to deliver. Tokenization promises both. South Korea's move signals a race to capture the future of capital markets, where every asset, from a treasury bill to a building, lives on a ledger. It's a pragmatic bet that the real value isn't in meme coins, but in digitizing the trillion-dollar securities market. (Take that, crypto purists.)

The Fine Print and The Fight

Expect fierce debate over investor protections, interoperability with global systems, and which entities get to play. The usual suspects—banks, brokerages, and maybe a few compliant crypto exchanges—will jockey for position. The goal? A framework robust enough for pension funds but flexible enough for innovation. It's a high-wire act, balancing innovation with the kind of guardrails that prevent, well, another finance-led meltdown.

South Korea's play is clear: shape the rules, attract the capital, and build a market that leaves yesterday's paper-based systems in the dust. The era of talk is over. The build has begun.

Lawmakers Amend Framework For Tokenized Securities

On Thursday, South Korea’s National Assembly passed key amendments to the Capital Markets Act and the Electronic Securities Act, creating a legal framework for the issuance and distribution of tokenized securities.

According to an official government release, the revised rules define tokenized securities as a broad category that extends to both debt and equity products, and recognize them as legitimate financial instruments.

The amendments to the Electronic Securities Act will allow qualified issuers to launch tokenized securities using distributed ledger technology. Meanwhile, the Capital Markets Act changes will enable the products to be traded as investment contract securities on brokerages and other licensed intermediaries.

Notably, the existing Capital Markets Act prohibited the distribution through securities firms, deeming investment contract securities “unsuitable for distribution due to their non-standard characteristics.”

The changes are “expected to enhance accessibility to investments and improve the provision of investment information for these securities,” the official government release stated.

After legislative approval, the bill will be submitted to the State Council, followed by official presidential promulgation. Therefore, the legislation is expected to be enacted one year after being signed into law, tentatively in January 2027.

Moreover, the Financial Services Commission (FSC) is set to lead the implementation, forming a joint “Token Securities Council” with relevant agencies to ensure seamless preparatory work, including the development of supporting infrastructure and enhanced safeguards.

The consultation body will comprise the FSC, the Financial Supervisory Service, the Korea Securities Depository, the Financial Investment Association, industry participants, and experts.

South Korea’s Crypto Regulatory Push Continues

This major step follows South Korea’s efforts to develop and establish clear, comprehensive rules to regulate the local crypto industry. Last week, the government shared its 2026 Economic Growth Strategy, which included a plan to open its market to bitcoin (BTC) Exchange-Traded Funds (ETFs) this year.

Crypto-based ETFs have been banned in South Korea since 2017. In 2024, the country’s regulator reaffirmed its stance after the US Securities and Exchange Commission (SEC) approved the investment products. However, it has now cited the success of the US and Hong Kong’s crypto funds as a key factor for their shift.

The FSC will also accelerate the next phase of its digital asset legislation this quarter to establish a clear regulatory framework for stablecoins. As reported by Bitcoinist, South Korea’s Second Phase of the Virtual Asset User Protection Act was delayed until the start of 2026 due to an ongoing disagreement between the FSC and the Bank of Korea (BOK).

The financial authorities have been clashing for months over rules related to the issuance and distribution of stablecoins, disagreeing on the extent of banks’ role in the issuance of won-pegged tokens.

Nonetheless, the main policies of the crypto framework have been decided, set to include investor protection measures, such as no-fault liability for crypto asset operators and isolation of bankruptcy risks for stablecoin issuers.

Moreover, the country is lifting its long-standing ban on institutional crypto trading, which is anticipated to begin later this year. According to local reports, the FSC is considering a rule to limit corporate cryptocurrency investments at 5% of a company’s equity capital.

Under the latest proposal, eligible firms WOULD be able to allocate up to 5% of equity capital per year to digital assets, limited to the top 20 cryptocurrencies by market capitalization. The final draft version could be released as early as January or February.