The financial authorities have unveiled a roadmap to gradually tokenize stocks, bonds, and funds in line with the implementation of the token securities system in February 2027. Initially focused on fractional investments, the token securities market will expand to include unlisted stocks, private bonds for institutional investors, and private money market funds (MMFs). The limit for net purchases by individual investors on over-the-counter exchanges is set at 100 million won per operator.
On September 4, the Financial Services Commission held the third meeting of the public-private joint token securities consultative body, announcing the 'Policy Direction for Token Securities.' The key objective is to broaden the scope of token securities issuance from fractional investment securities to include traditional securities such as stocks, bonds, and funds, in line with the amendment of the Electronic Securities Act set for February 2027.
In the first phase, the focus will be on tokenizing private MMFs, private bonds, and unlisted stocks for institutional investors. Stocks will be issued in the form of token securities by entrusting unlisted stocks already issued as electronic securities. In the fractional investment sector, efforts will be made to tokenize public fractional investment securities.
After assessing the stability, efficiency, and market demand of the first phase, the authorities plan to move to the second phase, which will involve the tokenization of public securities. Long-term plans include establishing an on-chain payment infrastructure that utilizes stablecoins as a payment method. The Korea Exchange will also conduct model verification and pilot projects for the tokenization of listed stocks.
Regulations for the distribution market have also been clarified. Businesses licensed for investment trading and brokerage under the Capital Markets Act can handle token securities without additional licensing within their existing scope. However, over-the-counter exchanges must consult with the Financial Supervisory Service before supporting token securities transactions. The trading limit for individual investors is set at a net purchase amount of 100 million won per over-the-counter exchange.
The authorities have also detailed a system for 'Issuer Account Management Institutions,' allowing issuers to directly manage investors' securities accounts. Non-financial companies can open and manage customer accounts for the securities they issue if they meet certain requirements. The minimum capital requirement for registration has been set at 4 billion won, up from the previous legal requirement of 1 billion won, and issuers must secure one account management specialist, one internal control specialist, and two IT specialists.
Investor protection standards for the fractional investment market have been established, including specific principles for issuance and distribution disclosures, individual subscription limits during public offerings, allocation methods, and conflict of interest prevention systems. As an example, the authorities suggest that the subscription limit for individual investors be set based on the underlying assets and issuance scale, proposing a standard example of the lesser of 30 million won or 5% of the issuance amount. No subscription limits will be imposed on professional investors.
Additionally, to prevent the concentration of public offerings among specific investors, the authorities recommend that internal regulations be established to set minimum allocation ratios for individual investors and minimum equal allocation ratios. The management report for trust property will have different verification requirements based on whether the issuance amount is below or above 300 million won.
As the token securities market expands, the authorities will also establish a management system for distributed ledger infrastructure. Securities firms that create their own distributed ledgers and apply for integration with the depository settlement system will undergo legal and technical reviews by the depository settlement organization, which will also conduct functional tests. The plan is to gradually expand the market rather than transferring all functions of the existing electronic securities system to a blockchain-based system at once.
In his opening remarks, Deputy Chairman Kwon Dae-young stated, “We will not confine token securities to fractional investments. Through a strategic and phased approach, we will lay the groundwork for issuing and trading existing financial products such as stocks, bonds, and funds in token form.”
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.