South Korea’s Financial Services Commission has set out a phased plan to move parts of the country’s securities market onto blockchain-based rails, with the first step scheduled for February 2027. The timetable depends on an amendment to the Electronic Registration Act taking effect, and the broader program would eventually connect tokenized securities to an on-chain payment system based on stablecoins.

The roadmap was presented on September 4 during the third public-private consultative meeting on securities tokenization. Regulators also released model standards for fractional investment and signaled that more detailed rule revisions under the Financial Investment Services and Capital Markets Act and the Electronic Registration Act should be completed by the end of September.

Three-stage rollout begins with limited asset classes

The FSC divided the transition into three stages rather than opening the full market at once. In the first phase, due to begin in February 2027, the eligible assets would include privately pooled money market funds and bonds sold only to institutional investors, unlisted shares held through trust structures, and publicly offered fractional investment securities.

A second phase would broaden tokenization to all types of publicly offered securities. The third stage is designed to add a blockchain-based payment mechanism tied to stablecoins, linking issuance and settlement more directly on-chain.

Later phases depend on market conditions and legislation

The commission did not present the latter two stages as automatic. It said the timing of phases two and three will depend on the outcome of the initial rollout, the speed of market adoption, and the direction of still-pending stablecoin legislation.

That makes the stablecoin element one of the most conditional parts of the plan. While regulators want the payment infrastructure to be in place by the final stage, the commission’s own timeline leaves room for adjustments if operational or legal conditions change.

New operating standards set limits for issuers and retail investors

Alongside the roadmap, the FSC published model rules for fractional investment products. Individual subscriptions would be capped at the lower of 30 million won, about $22,200, or 5% of a given issuance, and issuers would have to reserve a minimum allocation for retail buyers.

The regulator also said over-the-counter trading in tokenized securities would not require a separate license. Even so, firms would need to consult the Financial Supervisory Service in advance, and retail investors would face an annual limit of 100 million won, or roughly $74,000, in net purchases on each exchange.

Capital, staffing and technical checks remain part of the buildout

Companies that manage tokenized securities accounts will be required to hold at least 4 billion won in equity, equivalent to about $2.9 million. They must also maintain dedicated personnel for account administration, internal controls and information technology security.

At the market infrastructure level, the Korea Securities Depository is still completing the technical review process that brokerages and other securities firms must pass before they can connect to the shared ledger system. Those preparations suggest the policy roadmap is being paired with a more detailed operational framework.

Regulatory context and the next confirmed milestone

The plan arrives as tokenization continues to draw scrutiny over market stability and supervision. In an April note previously cited by CryptoPotato, the International Monetary Fund warned that tokenized markets can remove settlement delays that banks and regulators use to manage liquidity stress and intervene during crises. The IMF highlighted liquidity pressure, smart-contract oversight and cross-border enforcement as key concerns, and argued that public infrastructure such as a central bank digital currency could help contain those risks.

In South Korea, regulators have also shown a willingness to act against services they believe fall outside existing rules, including the August move to block domestic access to Polymarket over concerns it functioned as unlicensed gambling. For the tokenization roadmap, the next concrete step is nearer-term: revised rules under the FSCMA and the Electronic Registration Act are expected by the end of September.

Source: cryptopotato.com