South Korea will widen its tokenized securities market from February 4 next year, moving beyond fractional investment products to include more conventional instruments such as privately placed money market funds, privately placed bonds and unlisted shares.
The roadmap was presented by the Financial Services Commission on September 4 at the third meeting of a public-private consultative body on tokenized securities. Authorities also signaled a longer-term plan to connect the market to tokenized public securities and, later, stablecoin-based on-chain settlement.
Broader product scope under the new framework
Under the new phase, tokenization will be permitted for privately placed MMFs aimed at institutional investors and for privately placed bonds. For unlisted shares, the government plans to use a trust-based structure in which existing electronic securities are placed in trust and then issued and traded as tokenized beneficiary certificates.
The Financial Services Commission said the market will no longer be limited to the narrow use cases seen in earlier tokenized or fractional offerings. The expansion is intended to bring a wider set of established financial products into a digital securities framework.
Fractional investment rules will also be eased
The roadmap also broadens the rules for fractional investment products. Authorities said multiple assets with similar characteristics may be pooled under certain conditions, allowing a wider range of product design than before.
The plan further allows the use of future receivables, provided the underlying contracts are in place and investor protection measures are secured. The source article did not specify additional implementation details beyond those conditions.
No separate tokenized-securities license planned
South Korean authorities said they do not intend to introduce a dedicated licensing regime for tokenized securities. Instead, securities firms and over-the-counter trading platforms that already hold relevant licenses will be allowed to handle these products within the boundaries of their current approvals.
That approach suggests the expansion will be built on the existing financial market structure rather than through a standalone category for tokenized asset operators.
Public securities and on-chain settlement come later
Once the market is established, authorities plan to extend tokenization to public securities for retail investors. The roadmap describes that as a later stage rather than part of the February rollout.
In a final phase, officials said they will review an on-chain settlement model connected to stablecoin legislation. That structure would allow securities and payment instruments to be exchanged directly on blockchain networks, although the review remains a future step rather than a confirmed launch item.
What takes effect on February 4
The expansion is tied to an amendment to the Electronic Securities Act, which will take effect on February 4 next year and formally institutionalize tokenized securities in South Korea.
At the September 4 meeting, Financial Services Commission Vice Chairman Kwon Dae-young said tokenized securities would not remain confined to fractional products. He said existing financial products, including stocks, bonds and funds, would be connected within a digital capital-market framework, outlining the direction of the policy beyond the initial launch.
Source: en.bloomingbit.io