As South Korea intensifies its push for crypto regulation, lawmakers have advanced a bill to establish a legal framework for issuing and trading security token offerings (STOs) using distributed ledger technology (DLT).
Lawmakers Amend Framework For Tokenized Securities
On Thursday, South Korea’s National Assembly passed key amendments to the Capital Markets Act and the Electronic Securities Act, creating a legal framework for the issuance and distribution of tokenized securities.
According to an official government release, the revised rules define tokenized securities as a broad category that extends to both debt and equity products, recognizing them as legitimate financial instruments.
The amendments to the Electronic Securities Act will allow qualified issuers to launch tokenized securities using distributed ledger technology. Meanwhile, the Capital Markets Act changes will enable the products to be traded as investment contract securities on brokerages and other licensed intermediaries.
Notably, the existing Capital Markets Act prohibited the distribution through securities firms, deeming investment contract securities “unsuitable for distribution due to their non-standard characteristics.”
The changes are “expected to enhance accessibility to investments and improve the provision of investment information for these securities,” according to the official government release.
After legislative approval, the bill will be submitted to the State Council and followed by official presidential promulgation. Therefore, the legislation is expected to be enacted one year after being signed into law, tentatively in January 2027.
Moreover, the Financial Services Commission (FSC) is set to lead the implementation, forming a joint “Token Securities Council” with relevant agencies to ensure seamless preparatory work. This includes the development of supporting infrastructure and enhanced safeguards.
The consultation body will comprise the FSC, the Financial Supervisory Service, the Korea Securities Depository, the Financial Investment Association, industry participants, and experts.
South Korea’s Crypto Regulatory Push Continues
This major step follows South Korea’s efforts to develop and establish clear, comprehensive rules to regulate the local crypto industry. Last week, the government shared its 2026 Economic Growth Strategy, 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 US Securities and Exchange Commission (SEC) approved similar investment products. However, it has now cited the success of the US and Hong Kong’s crypto funds as significant factors for their regulatory shift.
The FSC aims to accelerate the next phase of its digital asset legislation this quarter to clarify the regulatory framework for stablecoins. As reported, the Second Phase of the Virtual Asset User Protection Act was delayed until the start of 2026 due to ongoing disagreements between the FSC and the Bank of Korea (BOK).
The financial authorities have clashed for months over rules regarding the issuance and distribution of stablecoins, mainly disputing the extent of banks’ involvement in the issuance of won-pegged tokens.
Nonetheless, the main policies of the crypto framework have been established, focusing on investor protection measures. This includes no-fault liability for crypto asset operators and isolating bankruptcy risks for stablecoin issuers.
Moreover, the country is lifting its long-standing ban on institutional crypto trading, which is anticipated to begin later this year. Reports indicate that the FSC is considering a rule to limit corporate cryptocurrency investments to 5% of a company’s equity capital.
Under the latest proposal, eligible firms would be allowed to allocate up to 5% of their equity capital annually to digital assets, constrained to the top 20 cryptocurrencies by market capitalization. The final draft could be released as early as January or February.
