South Korea Weaves Token Securities into Capital Market Overhaul

South Korea’s Financial Services Commission folded token securities infrastructure into a capital market infrastructure review it opened to coordinate reforms across government agencies and market operators.

The review combines work on tokenized securities with plans to speed settlement, extend trading hours and expand the use of artificial intelligence in market operations and supervision.

Token securities will be handled separately by a public-private council before being linked to the wider review. In January the National Assembly approved amendments recognizing blockchain-based distributed ledgers as valid securities registries and allowing the issuance and circulation of token securities. The FSC expects the legal framework to take effect in February 2027 after subordinate rules and supporting infrastructure are completed.

The review will produce a roadmap for shortening the securities settlement cycle, with a detailed plan due by October. The Korea Securities Depository aims to operate a system to settle over-the-counter trades in unlisted shares and fractional investment products by the end of 2026. The FSC launched the meeting on Tuesday to align timelines, technical work and rule-making among relevant bodies and market participants.

Samsung SDS won a Korea Securities Depository contract to build a token securities management platform that links the depository’s electronic securities account system to blockchain-based records. The company targets completion by February 2027 to match the planned start of the legal framework.

FSC Vice Chairman Kwon Dae-young listed four policy priorities: ‘trust, shareholder protection, innovation and market access.’ He noted regulators will coordinate across agencies and market operators to ensure the new systems operate alongside conventional trading and settlement infrastructure.

The FSC and the Korea Securities Depository said they aim to align legal, regulatory and technical milestones so tokenized assets can be issued and settled under the same compliance and operational standards that govern existing securities. The calendar sets operational milestones for OTC settlement systems in 2026 and the formal regulatory framework for token securities in early 2027.