Stocks, Bonds, Funds: Seoul Prepares for Their Arrival on the Blockchain

Seoul is no longer tinkering. The Financial Services Commission (FSC), South Korea's financial regulator, has laid out a three-phase roadmap before its public-private joint committee to facilitate the issuance and circulation of financial securities on a distributed ledger (blockchain). Stocks, bonds, funds: tokenization will not be limited to fractional investment products, it aims at the heart of the Korean capital market. The timeline is tied to a text. The reform of the electronic registration law for stocks and bonds will come into effect on February 4, 2027, and will legally recognize security tokens as a digital form of financial securities. The first wave of tokenized issuances will start shortly thereafter.

Key Points {#h-key-points}

• The South Korean FSC adopts a three-phase roadmap, backed by the reform of the electronic registration law for securities, effective February 4, 2027.
• Phase 1: Money market funds and bonds reserved for institutional investors, unlisted stocks via trust, fractional investment securities offered to the public.
• Individual caps: 30 million won per subscription (approximately 19,000 euros) and 100 million won of net annual purchases per over-the-counter platform.
• The third phase plans for an on-chain payment infrastructure backed by stablecoins, pending the Korean legislative debate.

Stocks and Bonds Soon to be Offered in Token Form

The roadmap outlines three steps. The first will begin in February 2027 with a limited number of products: private money market funds and bonds reserved for institutional investors, unlisted stocks held through a trust, and publicly accessible fractional investment products.

Fractional investment allows a costly asset to be divided into small shares. Instead of buying a property, a piece of art, or music rights alone, multiple investors can acquire a fraction of it. South Korea is already regulating this market, especially since the reclassification of music royalty rights offered by Musicow as financial securities in 2022.

During the second phase, tokenization will be extended to all securities offered to the public. A tokenized stock or bond will retain the legal nature of a financial security: the blockchain will primarily serve to record its ownership and transfers.

The networks used must be connected to the infrastructures supervised by the Korea Securities Depository (KSD), the country's central depository. Therefore, they will not necessarily be freely tradable tokens on the same platforms as Bitcoin or Ethereum.

Limits for Individuals Before the Arrival of Stablecoins

The FSC plans several safeguards. For certain fractional investments, it recommends that an individual subscription does not exceed 30 million won, or approximately 19,000 euros, or 5% of the total issuance amount if this threshold is lower.

A portion of public offerings must also be reserved for individuals to prevent the wealthiest investors from absorbing all available securities. On each platform specializing in over-the-counter exchanges, an individual's net purchases will be capped at 100 million won per year, or approximately 62,000 euros.

The reform will not impose a new general license on all professionals. Financial companies already licensed will be able to offer tokenized securities within the limits of their current authorizations. However, issuers wishing to manage their clients' accounts themselves must have at least 4 billion won in equity, dedicated teams, and sufficiently secure IT systems.

The final phase aims to connect these markets to a payment infrastructure using stablecoins. In practice, a security and its payment could then be transferred on the blockchain during the same operation.

This final step does not yet have a timeline. It will depend on the results obtained from 2027, the technologies adopted by financial players, and especially the future South Korean law on stablecoins. Seoul is therefore progressing gradually: first tokenizing securities, then only organizing their settlement directly on the blockchain.

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