South Korea’s National Assembly has approved sweeping amendments to the Capital Markets Act and the Electronic Securities Act, creating a formal legal framework for Security Token Offerings (STOs).
The legislation institutionalizes blockchain-based securities, allowing assets such as real estate, artwork, and music rights to be tokenized and sold as fractional investment stakes.
The move places tokenized securities squarely within the country’s capital markets regime, replacing pilot programs and regulatory ambiguity with statutory recognition and defined oversight.
Legal Recognition and Issuer Autonomy
Under the new framework, token securities are officially recognized as a category of digital securities issued and managed using distributed ledger technology. Qualified issuers that meet prescribed criteria can electronically register, issue, and manage tokenized securities without always relying on traditional intermediaries, a shift designed to streamline issuance while retaining regulatory controls.
To support the system, the law introduces a new class of regulated entities known as Issuance Account Management Institutions. These institutions will provide the technical infrastructure and oversee token management, acting as a control layer between issuers and investors.
Opening the Door to Secondary Trading
The amendments also address market access beyond issuance. Certain atypical securities, including investment contracts, will be permitted to trade in the over-the-counter market through newly licensed brokerage services. This expands liquidity options for tokenized assets while keeping trading within supervised channels.
Phased Rollout Through 2027
Implementation will proceed in stages. Revisions to the Capital Markets Act take effect immediately upon publication, expected in January 2026. Investment solicitation guidelines will follow six months later. Provisions governing OTC trading are scheduled to come into force one year after publication, around January 2027.
Regulatory Coordination and Infrastructure Build-Out
The Financial Services Commission plans to convene a Token Securities Council in February 2026. The body will include the Korea Securities Depository and industry experts, with a mandate to develop distributed ledger-based account management, technical standards, and enhanced investor safeguards.
The STO reforms form part of South Korea’s broader 2026 Economic Growth Strategy, which also includes lifting a nine-year ban on corporate crypto investing. Together, the measures signal a coordinated push to modernize capital markets by integrating regulated digital asset infrastructure into the financial system.