South Korea has advanced a legal framework for security token offerings after lawmakers approved amendments enabling regulated blockchain-based issuance and trading of tokenized securities. The move positions tokenized assets within existing capital markets rather than outside them.
On Thursday, the National Assembly approved amendments to the Capital Markets Act and the Electronic Securities Act during a plenary session, according to a government release. The bills establish formal rules for issuing and trading securities using distributed ledger technology.
The framework creates a legal pathway for tokenized securities across debt and equity instruments while keeping oversight within current market systems. With implementation scheduled for January 2027, regulators plan a one-year preparation period following presidential promulgation.
The amendments to the Electronic Securities Act allow qualified issuers to launch tokenized securities using blockchain-based ledgers. These changes recognize digital securities as lawful instruments under South Korean law.
At the same time, amendments to the Capital Markets Act permit trading of tokenized products as investment contract securities. Brokerages and financial intermediaries can list and distribute these assets within regulated platforms.
Together, the laws define token securities as a broad category that applies to various instruments. This approach integrates blockchain issuance into existing systems instead of replacing traditional infrastructure.
The Financial Services Commission said the framework supports ledger-based securities account management. Regulators expect wider use of smart contracts during issuance and settlement processes.
According to the commission, distributed ledgers can improve account handling while supporting automated execution through smart contracts. The framework allows these tools within compliant securities infrastructure.
Why does the government expect smart contracts to play a larger role in securities issuance and settlement as tokenization expands? The commission first released related guidelines in 2023. Those guidelines laid the groundwork for the legislative changes approved this week.
Following parliamentary approval, the bills will move to the State Council before presidential promulgation. Officials expect a smooth process based on legislative support. The laws will take effect in January 2027 after a one-year transition. During that period, market participants can prepare platforms and compliance systems.
A report cited by Hankyung noted that the Boston Consulting Group forecasts South Korea’s token securities market could reach 367 trillion won, or $249 billion, by decade’s end. Major domestic firms have already advanced related initiatives. These include Mirae Asset Securities and Hana Financial Group, which have pursued platforms and collaborations tied to tokenization.
Meanwhile, South Korea continues work on the Digital Asset Basic Act. That proposal aims to formalize rules for won-pegged stablecoins and the country’s first spot crypto exchange-traded funds. The final version is expected in the first quarter of this year.
The government views the STO framework as part of a broader effort to align blockchain technology with regulated financial markets while maintaining investor protections and market oversight.
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South Korea has approved a legal framework for security token offerings by amending capital market laws. The rules allow regulated issuance and trading of tokenized securities using blockchain systems. With implementation set for January 2027, financial firms now have time to prepare compliant platforms and infrastructure.