As South Korea steps up its push for crypto regulation, lawmakers have introduced a bill to establish a legal framework for the issuance and trading of security token offerings (STOs) using distributed ledger technology (DLT).
Lawmakers change framework for tokenized securities
South Korea’s National Assembly passed key amendments to the Capital Markets Law and the Electronic Securities Law on Thursday, creating a legal framework for the issuance and distribution of tokenized securities.
According to an official government statement, the revised rules define tokenized securities as a broad category that extends to both debt and equity products, and recognize them as legitimate financial instruments.
Amendments to the Electronic Securities Act will allow qualified issuers to launch tokenized securities using distributed ledger technology. At the same time, amendments to the Capital Markets Act will allow products to be traded as investment contract securities with brokerage houses and other licensed intermediaries.
Notably, the current Capital Markets Law prohibited distribution through securities companies, deeming investment contract securities “unsuitable for distribution due to their non-standard characteristics.”
The changes “are expected to improve accessibility to investments and improve the provision of investment information for these securities,” the official government statement said.
After legislative approval, the bill will be submitted to the Council of State, followed by official presidential promulgation. Therefore, the legislation is expected to be enacted one year after being signed into law, tentatively in January 2027.
Additionally, the Financial Services Commission (FSC) should lead implementation, forming a joint “Token Securities Council” with relevant agencies to ensure smooth preparatory work, including the development of supporting infrastructure and enhanced safeguards.
The consultation body will include the FSC, the Financial Supervisory Service, the Korea Securities Depository, the Financial Investment Association, industry participants and experts.
Crypto regulation efforts in South Korea continue
This major step follows South Korea’s efforts to develop and establish clear and comprehensive rules to regulate the local crypto industry. Last week, the government shared its economic growth strategy for 2026, which included a plan to open its market to Bitcoin (BTC) exchange-traded funds (ETFs) this year.
Crypto-based ETFs have been banned in South Korea since 2017. In 2024, the country’s regulator reaffirmed its stance after the United States Securities and Exchange Commission (SEC) approved the investment products. However, he has now cited the success of crypto funds in the US and Hong Kong as a key factor in their change.
The FSC will also accelerate the next phase of its digital asset legislation this quarter to establish a clear regulatory framework for stablecoins. As Bitcoinist reported, South Korea’s second phase of the Virtual Asset User Protection Act has been delayed until early 2026 due to an ongoing disagreement between the FSC and the Bank of Korea (BOK).
Financial authorities have clashed for months over rules related to the issuance and distribution of stablecoins, disagreeing over the extent of banks’ role in issuing tokens pegged to the won.
Nevertheless, the main policies of the crypto framework have been decided and are expected to include investor protection measures, such as no-fault liability for crypto asset operators and bankruptcy risk insulation for stablecoin issuers.
Additionally, the country is lifting its long-standing ban on institutional cryptocurrency trading, which is expected to begin later this year. According to local reports, the FSC is considering a rule limiting corporate investments in cryptocurrency to 5% of a company’s equity.
Under the latest proposal, eligible companies could allocate up to 5% of their equity per year to digital assets, limited to the top 20 cryptocurrencies by market capitalization. The final version could be released as early as January or February.
The total crypto market capitalization is at $3.17 trillion on the one-week chart. Source: TOTAL on TradingView
Featured image from Unsplash.com, chart from TradingView.com
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