South Korea’s Landmark Move: Bill Advances to Legalize Tokenized Securities Issuance and Trading

Seoul is cutting the red tape—and Wall Street might want to pay attention.

From Regulatory Gray Zone to Green Light

The National Assembly just pushed forward legislation that formally recognizes tokenized securities as legitimate financial instruments. This isn't a side project; it's a main-stage rewrite of the rulebook. The bill carves out a legal pathway for issuing and trading digital stocks, bonds, and funds on blockchain rails—bypassing decades-old settlement systems in a single swipe.

What's Actually Changing?

Forget speculative memecoins. This is about digitizing traditional assets. Think corporate bonds that settle in minutes, not days, or fractional shares of real estate traded 24/7. The law grants these tokens the same legal standing as their paper-based ancestors, forcing legacy custodians and exchanges to adapt or get sidelined.

The Ripple Effect

Local fintechs are already revving engines, while traditional finance giants face a classic innovator's dilemma: embrace the tech that cannibalizes their fee-heavy settlement business, or watch agile newcomers eat their lunch. It’s a masterclass in regulatory capture—just this time, the disruptors wrote the bill first.

One cynical take? The same institutions that spent years lobbying against crypto are now scrambling to tokenize their own balance sheets—hypocrisy makes for great business strategy. South Korea isn't just testing the waters; it's building the dam. The global race to define digital finance just found its pace car.

South Korea Sets Legal Rules for Issuing and Trading Tokenized Securities

The changes recognize tokenized securities as legitimate financial instruments and define how they can be issued, distributed and traded under Korean law.

Under the revised framework, the Electronic Securities Act allows eligible issuers to create tokenized securities using blockchain infrastructure.

Amendments to the Capital Markets Act, meanwhile, permit those products to be traded as investment contract securities through brokerages and other licensed intermediaries.

Regulators say the goal is to combine the efficiencies of distributed ledgers with existing investor protections.

The Financial Services Commission said the reforms are expected to improve how securities accounts are managed and to expand the use of smart contracts across market infrastructure.

Officials also described tokenized securities as a broad category that can apply to both debt and equity products, rather than a niche asset class.

Government officials highlighted potential benefits for non-standard investment contracts that have historically faced distribution limits, such as securities tied to real estate, artwork or agricultural projects.

By bringing these products under a regulated STO framework, authorities aim to widen investor access while maintaining oversight.

Following legislative approval, the bills will move to the state council before being formally promulgated by the president, a process widely expected to conclude without major changes.

The laws are scheduled to take effect in January 2027, after a one-year preparation period.

South Korea’s push into tokenized securities follows earlier groundwork laid by the FSC, which first released STO-related guidelines in 2023.

Implementation will be led by the FSC, working alongside the Financial Supervisory Service, the Korea Securities Depository and industry participants.

A consultation body is expected to meet as early as next month to develop supporting infrastructure, including ledger-based account management systems and additional safeguards.

Tokenized Securities Market Could Hit $2T Globally

Market forecasts suggest the opportunity could be significant. Standard Chartered previously projected that tokenized real-world assets could reach a $2 trillion market capitalization by 2028.

Separately, Boston Consulting Group estimated South Korea’s tokenized securities market alone could grow to nearly 367 trillion won ($249 billion) by the end of the decade.

Local financial groups such as Mirae Asset Securities and Hana Financial Group have already begun building platforms in anticipation of the new rules.

Last month, South Korea revealed that it is preparing one of its most aggressive crackdowns on cryptocurrency-related financial crime by expanding its travel rule requirements.

The new threshold covers transactions under 1 million won ($680), which until now allowed users to bypass identity checks by breaking transfers into smaller amounts.