Tokenisation in Korea — Part 2: The Current Framework
Part 1 referred to Dostoevsky’s “coined liberty”—the idea that a transferable claim moves value. This part describes how Korea proposes to regulate those claims today.
As the law currently stands, companies cannot directly issue tokens as a representation of a shareholding: company law remains unaltered. In order to create a token, shares must first be issued or transferred to a custodian or trustee.
An agreement is made with the token issuer as how the various rights and obligations of the share are to be dealt with. The legal title to the share remains with the custodian or trustee. The economic (beneficial) interest together with the rights attached thereto are wrapped in a token by the token issuer who in turn issues the tokens.
Two Kinds of Token
The question of how the token will then be treated under Korean law depends on its particular qualities. If the token is a security—a matter determined by its economic substance under the Financial Investment Services and Capital Markets Act—issuers follow the security-token path and register ownership electronically through that system.
If the token is not a security, the Act on the Protection of Virtual Asset Users applies. Virtual-asset service providers must register under anti-money-laundering rules. User protection, venues, and custody follow that track.
What Korea Changed in 2026
In January 2026, the National Assembly amended the Act on Electronic Registration of Stocks and Bonds and the capital markets statute. The amendments allow regulators to treat a shared digital ledger as a securities registry and it permits issuers to issue securities as tokens. This will become effective from February 2027.
The Korea Securities Depository
Markets need a trusted, supervised book (ledger) of who owns what—one that courts and regulators can treat as authoritative. The Korea Securities Depository (KSD) is Korea’s central securities depository. It is important to note that the KSD is not a blockchain.
KSD is a regulated record-keeping institution for who owns securities. It keeps the official electronic record of holdings in stocks, bonds, and similar instruments. Courts and regulators treat that record as the authoritative book. The Financial Services Commission will exercise oversight.
Timing: February 2027
As of September 2026, Korea has legislated the pathway but has not yet begun registering security tokens on a domestic ledger. Work continues among the FSC, KSD, and market participants. The bridge takes effect on 4 February 2027. Before that date, issuers cannot yet put domestic securities on that ledger as official electronic registrations.
Regulatory Framework in Practice: Who Is Regulated
Custodians and trustees
The party that holds legal title to the shares or other underlying assets is typically a licensed trust company or another regulated financial institution. It is supervised under the trust and financial statutes that already govern custody and trust business in Korea—capital, governance, segregation of assets, and reporting among them. Holding the underlying for a tokenised product does not take it outside that regime.
Token issuers
The issuer that puts out the tokens sits under capital markets rules where the token is a security. Under the new electronic-registration path, a qualified issuer may also act as an “issuer account management entity,” managing investor accounts for tokenised securities.
That role carries express gatekeeping conditions: equity capital (the FSC’s September 2026 policy direction pointed to KRW 4 billion or more (approx. US$2.9 million), staffing, IT systems, and cybersecurity standards. Exact thresholds belong in the final subordinate statutes, but the direction is clear—issuers are not free agents; they must meet financial and operational requirements before they manage accounts on the supervised ledger.
Firms that deal in the tokens
Securities companies and other licensed financial investment firms buy, sell, and arrange trades in tokenised securities under their existing Financial Investment Services and Capital Markets Act licences.
OTC dealing in tokenised securities generally requires prior consultation with the Financial Supervisory Service. Unfair-trading and disclosure rules continue to apply because the instrument remains a security. Dealing is therefore an extension of licensed securities business, not an unregulated side market.
Investors
Purchasers are not licensed intermediaries. They are still subject to investor protection and trading rules—among them an annual net purchase limit of KRW 100 million (approx. US$72,000) per OTC exchange for retail buyers under the announced policy direction. Protection and limits, not a dealing licence, define their place in the framework.
Record-keeper and supervisors
The KSD keeps the official securities record. The FSC, with the FSS, supervises the market. They set and police the conditions under which the custodians, issuers, and dealing firms above may operate. They are not brokers in the chain; they are the institutional frame around it.
In short, every commercial actor in the security-token path—custodian, issuer, and dealing firm—is meant to be regulated. The investor is protected. The KSD and the FSC/FSS supervise the book and the market.
The FSC Roadmap
On 4 September 2026, the FSC published a three phase roadmap for securities issued as tokens. Phase 1 begins with the February 2027 bridge. It covers privately pooled money market funds and bonds for institutional investors; unlisted stocks through a trust; and publicly offered fractional investment securities.
Phase 2 contemplates more publicly offered securities. Phase 3 looks toward on-chain settlement with stablecoins, subject to unfinished stablecoin legislation—the clearest signal that fuller blockchain settlement is contemplated.
Conclusion
Korea cannot move from the traditional system—“TradFi” registers, custodians, and paper-era statutes—straight onto blockchain in a single step. A true native leap would mean rewriting company law under the Commercial Act and property law under the Civil Act, not merely wrapping existing rights in tokens.
That kind of change can only be done gradually. Broader policy and economic considerations sit behind the technical path as well: Korea’s foreign exchange control regime is one example; capital-markets licensing, investor protection, and settlement design are others. The February 2027 bridge and the FSC’s phased roadmap reflect that reality—a step-by-step process, not an overnight switch.
In the short term, the wrap remains: custodians and trustees hold the asset; regulated issuers put out tokens; security-token ownership is meant to sit on a supervised register linked to the KSD, which is a central securities depository and not a blockchain. Longer term, on-chain settlement is contemplated. Part 3 turns to what deeper Commercial Act and Civil Act reform would actually require.
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Mark Benton is a foreign attorney at AHNSE Law Offices (법무법인 안세). Informational only; not legal advice.
