South Korea's Financial Services Commission has proposed detailed regulations to allow tokenized trading of stocks, bonds, and funds starting February 4, 2027. The rules require token issuers managing customer accounts to hold at least 4 billion won in equity capital and limit retail investors to 100 million won in annual net purchases per over-the-counter exchange. Meanwhile, bipartisan political pressure and industry opposition from groups like the Digital Asset eXchange Alliance are mounting to delay the country's upcoming 20% cryptocurrency income tax.
Timeline and roadmap for tokenized securities
- ▪The Financial Services Commission's tokenization rollout follows a three-phase roadmap announced on September 4, 2026, which includes institutional money market funds and bonds in Stage 1, publicly offered securities in Stage 2, and an on-chain settlement layer tied to stablecoins in Stage 3
- ▪The Financial Services Commission opened a public comment window from October 2 to November 11, 2026, for the proposed subordinate rules on tokenized securities
- ▪South Korea's Financial Services Commission proposed subordinate rules under the Financial Investment Services and Capital Markets Act and the Electronic Registration Act to allow tokenized trading of stocks, bonds, and funds starting February 4, 2027
Requirements for issuer account management entities
- ▪Companies qualifying as issuer account management entities under the Financial Services Commission's tokenized securities proposal must employ at least one account-management specialist, one internal-control specialist, and two IT specialists
- ▪The Financial Services Commission's tokenized securities proposal introduces an 'issuer account management entity' category, allowing companies that issue tokenized securities to also manage customer accounts, a service previously restricted to financial firms
- ▪Issuers of tokenized securities in South Korea must share distributed ledgers across the Korea Securities Depository and at least two account management entities, without charging a direct fee for using the ledger
- ▪Under the Financial Services Commission's tokenized securities proposal, companies seeking to issue tokenized securities and manage customer accounts must hold at least 4 billion Korean won (approximately $2.8 million) in equity capital
Regulations for over-the-counter tokenized securities
- ▪The Financial Services Commission's proposed capital markets regulation revisions in South Korea introduce an over-the-counter licensing unit for debt securities, joining existing units for unlisted stocks and non-monetary trust beneficiary certificates
- ▪The Financial Services Commission's tokenized securities proposal caps annual net purchases of tokenized securities by retail investors at 100 million Korean won (approximately $70,000) on each over-the-counter exchange
Efforts to delay the cryptocurrency income tax
- ▪South Korean lawmakers from both the ruling Democratic Party and the opposition People Power Party have proposed delaying the cryptocurrency income tax, currently scheduled to take effect on January 1, with proposed start dates ranging from 2029 to 2030
- ▪A Tiger Research survey conducted with Chainalysis found that 73.7% of 2,423 South Korean investors opposed South Korea's planned 20% cryptocurrency income tax, while a citizen petition seeking a delay gathered over 50,000 signatures
- ▪The Digital Asset eXchange Alliance informed South Korean lawmakers that cryptocurrency exchanges lack a standardized data network with regulators and require more time to build and test the standardized data network
Debatable claims
- ▪South Korea's 4 billion won capital requirement for tokenized securities issuers is too high
- ▪Tokenizing conventional securities like stocks and bonds does more harm than good
- ▪South Korea's retail investment cap on tokenized securities is necessary to protect investors
- ▪Allowing non-financial firms to manage tokenized securities accounts poses unacceptable risks
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