The Financial Services Commission (FSC) is building infrastructure in stages to enable not only fractional investment products but also existing securities, including stocks, bonds and funds, to be issued and traded in token form. The FSC unveiled this policy direction on September 4 at the third meeting of the joint public-private consultative body on token securities. It plans to start with selected products when the amended Electronic Securities Act takes effect on February 4, 2027, then expand the scope of eligible products and the settlement infrastructure.
Phase one covers privately placed money market funds (MMFs) and privately placed corporate bonds, both restricted to institutional investors, trust beneficiary securities backed by unlisted shares, and publicly offered fractional investment securities. For unlisted shares, the plan is to place electronically registered shares in trust with the Korea Securities Depository or a trust company, which would issue beneficiary securities in token form. Voting rights, dividends and other rights attached to the shares would be managed through the existing electronic securities system, while rights attached to the beneficiary securities would be managed through the token securities infrastructure.
Phase two would expand tokenization to publicly offered stocks, bonds, funds and other securities. Phase three would introduce onchain settlement by integrating stablecoins and other means of payment. The timing of phases two and three will depend on the stability and efficiency of initial operations, technological developments, stablecoin legislation and other factors. Validation of tokenization models for listed shares and pilot projects led by the Korea Exchange will also proceed in parallel.
Existing financial investment firms will be able to handle token securities within the scope of their authorized business without obtaining additional authorization. However, the plan is to require prior consultation with the Financial Supervisory Service before over-the-counter exchanges support trading. The proposed trading limit for retail investors is KRW 100 million in annual net purchases per over-the-counter exchange. The FSC plans to apply registration requirements, including KRW 4 billion in equity capital and specialized personnel, to "issuer account management institutions," which directly manage customer accounts for securities they issue themselves. Draft amendments to the relevant subordinate regulations are scheduled to be published for public consultation at the end of September.