Key facts
- South Korea will tokenize stocks, bonds, and funds in three stages, starting February 2027.
- Existing financial institutions will not need new licenses to offer tokenized securities.
- Step 1 includes private MMFs, private bonds, unlisted stocks, and fractional investment securities.
- Step 3 aims for simultaneous onchain settlement of trades and cash legs using stablecoins.
- Tokenized securities will be regulated as securities, not crypto assets, avoiding crypto tax implications.
- A legal framework for won-stablecoins is still under development.
South Korea's Financial Services Commission (FSC) has unveiled a comprehensive three-stage roadmap for tokenizing securities, including stocks, bonds, and funds, with the initiative set to commence in February 2027. This timeline aligns with the effective date of the country's recently amended securities laws, which will allow existing brokers and securities firms to offer these on-chain products without needing new licenses.
The phased approach begins with Step 1 in February 2027, focusing on institutional private money market funds, private bonds, unlisted stocks digitized through trusts, and small-lot fractional investment securities. This initial phase is designed to limit build costs and operational risks, requiring brokers to establish distributed ledgers connected to the Korea Securities Depository (KSD).
Step 2 will broaden the scope to include publicly offered securities, contingent on the stability of the initial phase, the readiness of private sector technology, and progress in stablecoin regulation. The final stage, Step 3, envisions onchain settlement using stablecoins, enabling simultaneous settlement of both the trade and its cash leg, effectively replacing the current T+1 and T+2 settlement cycles with near-instant delivery-versus-payment.
The legal groundwork has been laid with amendments to the Electronic Securities Act and the Capital Markets Act passed in January 2026. A more detailed roadmap and subordinate rules are slated for public consultation by the end of September 2026.
Several major institutions are already preparing for this transition. Koscom, a subsidiary of the Korea Exchange, is developing a shared issuance platform, KoSTO, which has already secured commitments from 12 securities firms. Koscom is also working on a stablecoin settlement proof-of-concept. Shinhan Asset Management is collaborating with Solana Foundation, Etherfuse, and Orca to create a KRW tokenized short-term bond fund for offshore investors, mirroring BlackRock's BUIDL product. Ripple has previously demonstrated the feasibility of tokenized government bond settlement in Korea through a partnership with Kyobo Life.
A significant hurdle remains for Step 3: the establishment of a legal framework for won-stablecoins, known as the Digital Asset Basic Act, which is still in draft. Disagreements persist between the FSC and the Bank of Korea regarding stablecoin governance. Despite this, Project Hangang, a won-backed stablecoin initiative by Korean banking giants, is progressing.
South Korea's approach emphasizes offering tokenized securities within a regulated, KSD-linked framework, distinguishing it from offshore products. Crucially, the Finance Ministry has confirmed that tokenized securities will be treated as securities under capital markets law, not as crypto assets. This classification exempts them from the 22% crypto tax set to begin in January 2027, addressing a key compliance concern for institutional investors.