South Korea adds token securities to capital market overhaul

South Korea’s financial regulator folded token securities infrastructure into a broader overhaul of the country’s capital markets, alongside plans for faster settlement, longer trading hours and greater use of artificial intelligence.

On Tuesday, the Financial Services Commission (FSC) said it had launched a capital market infrastructure review meeting to coordinate reforms across government agencies and market operators. According to the FSC, plans for token securities will be further discussed separately through a public-private council before being linked to the wider initiative.

The initiative includes a roadmap for shortening the securities settlement cycle, expected by October, and a Korea Securities Depository (KSD) system for settling over-the-counter trades in unlisted shares and fractional investment products by the end of 2026.

The move places tokenized securities within the country’s broader effort to modernize traditional financial markets, potentially bringing blockchain-based investment products closer to systems used for mainstream securities settlement and trading.

FSC Vice Chairman Kwon Dae-young said the initiative would build on broader efforts to improve the capital market, guided by four policy priorities: trust, shareholder protection, innovation and market access.

South Korea prepares token securities framework for 2027

South Korea's token securities initiative predates the latest capital-market review. In January, the National Assembly approved amendments recognizing blockchain-based distributed ledgers as valid securities registries and permitting the issuance and circulation of token securities.

According to the FSC, the framework is scheduled to take effect in February 2027, after regulators complete subordinate rules and supporting infrastructure. At the second meeting of its public-private token securities council in May, the FSC said it was targeting July for the release of proposed subordinate regulations and guidelines.

Technical infrastructure is also under development. Samsung SDS said in May that it had won a KSD contract to build a token securities management platform that connects the depository’s existing electronic securities account system to blockchain-based data. The company aims to complete the platform by February 2027, when the new framework is scheduled to take effect.

According to the FSC, detailed token securities plans will continue to be discussed by the public-private council before being linked to the broader review, part of South Korea's preparations for a real-time, continuously accessible and integrated digital market.