South Korea to Digitize Entire Securities Market by 2027 Through Blockchain Tokenization

Key Highlights

• Korea’s Financial Services Commission has revealed a comprehensive three-phase strategy to digitize all securities across the capital markets
• Initial rollout begins February 4, 2027, targeting money market funds, corporate bonds, and unlisted equity for institutional market participants
• Second phase broadens tokenization scope to encompass all publicly offered securities pending successful first-phase implementation
• Final phase establishes blockchain-native stablecoin settlement infrastructure
• Current license holders can trade tokenized securities without obtaining additional regulatory approvals

South Korean financial authorities have released a comprehensive roadmap outlining their vision to digitize the nation’s complete capital market infrastructure through tokenization, spanning from private corporate debt to publicly traded equities, culminating in stablecoin-based settlement systems.

The Financial Services Commission (FSC) alongside the Financial Supervisory Service (FSS) revealed the strategic initiative on Friday during the third session of their tokenized securities advisory committee.

The nation currently boasts 11.3 million verified cryptocurrency users and operates a stock market generating daily trading volumes comparable to major crypto exchanges.

Initial Rollout Scheduled for February 2027

The inaugural phase launches when South Korea’s revised Electronic Registration Act becomes operational on February 4, 2027. This legislative framework provides legal recognition for blockchain-recorded securities.

During the initial phase, private money market funds and private corporate bonds designated for institutional participants will undergo tokenization first. Unlisted equities will also be digitized using a trust-based framework, whereby the original shares remain in the conventional registry while investors hold a tokenized trust-beneficiary instrument.

Retail market participants trading on over-the-counter platforms will encounter an annual net acquisition ceiling of 100 million won, approximately $74,000, per trading venue. Individual subscription amounts are restricted to 30 million won, roughly $22,000, or 5% of total issuance volume, whichever amount is smaller.

Blockchain-Native Stablecoin Settlement Marks Ultimate Vision

Following successful phase one execution, the second phase will expand tokenization eligibility to encompass all publicly offered securities. The deployment timeline for phases two and three hinges on first-phase performance metrics and forthcoming stablecoin regulatory legislation.

The third and concluding phase establishes a blockchain-native payment infrastructure enabling investors to settle tokenized securities transactions using stablecoins.

The FSC cited BlackRock’s BUIDL tokenized fund and Hong Kong’s tokenized green bond initiatives as benchmark examples for the program.

Non-banking entities seeking to operate investor accounts for their proprietary token securities must maintain minimum equity capital of 4 billion won, approximately $3 million, and employ dedicated compliance and information technology personnel.

Currently licensed brokerage firms and trading entities will not require supplementary licensing to facilitate tokenized securities transactions. Over-the-counter trading platforms must obtain FSS consultation before commencing operations.

The FSC indicated it intends to present proposals for revising subordinate legislation before September concludes.

South Korea’s initiative follows Japan’s announcement last week regarding plans for a nationwide blockchain settlement infrastructure for equities and government bonds, targeting early 2030s deployment. Singapore similarly finalized its stablecoin licensing framework this week.

The FSC stated its overarching objective is the complete transformation of capital market infrastructure to enable digital connectivity.

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