South Korea’s Financial Services Commission has published a more detailed proposal for how tokenized securities could be issued and traded under the country’s upcoming framework, which is due to take effect in February 2027.

The plan would permit stocks, bonds, funds and some fractional investment securities to be issued and circulated in tokenized form. It also sets out operational and capital requirements for firms involved in issuance and introduces a new over-the-counter structure for certain debt products.

Issuers face capital and staffing requirements

Under the proposal, companies that issue tokenized securities while also directly managing customer accounts would need at least 4 billion Korean won, or about $2.8 million, in equity capital.

Those firms would also be required to maintain dedicated compliance and technology personnel. The measures are aimed at defining the standards for businesses that would handle tokenized securities within the new system.

OTC debt trading would get a separate license

Alongside the token issuance rules, the proposed revisions to capital markets regulations would establish an additional over-the-counter exchange license for debt securities.

The framework would also place a limit on retail participation in that segment. Individual investors would be capped at 100 million won, roughly $70,000, in annual net purchases on each OTC exchange.

Part of a broader phased roadmap

The latest proposal follows a three-phase roadmap unveiled on Sept. 4 for moving securities issuance and trading onto distributed-ledger infrastructure.

In practical terms, the package is intended to support a market structure in which traditional financial instruments can be recorded, issued and circulated using distributed ledgers, rather than only through existing systems.

Consultation runs through November

The commission’s draft rules will be open for public consultation from Friday until Nov. 11. After that period, the proposal will move into an approval process.

If adopted as scheduled, the regulations would take effect on Feb. 4, 2027. That timing aligns with related legal amendments that would formally recognize distributed ledgers as infrastructure for issuing and circulating securities in South Korea.

Source: cointelegraph.com