South Korea Takes Major Step Towards Blockchain-Based Capital Markets
South Korea has made a significant move towards formalizing blockchain-based capital markets with the passage of legislation that creates a legal framework for the issuance and trading of tokenized securities. This development is expected to open the door for regulated security token offerings (STOs) and firmly anchor distributed ledger technology in the country’s existing financial system.
Key Aspects of the Legislation
The National Assembly passed amendments to both the Capital Markets Law and the Electronic Securities Law, recognizing tokenized securities as legitimate financial instruments and specifying how they can be issued, distributed, and traded under Korean law. The Electronic Securities Act allows eligible issuers to create tokenized securities using blockchain infrastructure, while the Capital Markets Act enables these products to be traded as investment contract securities via brokerage firms and other licensed intermediaries.
According to regulators, the goal is to combine the efficiency of distributed ledgers with existing investor protections. The Financial Services Commission said the reforms are expected to improve securities account management and expand the use of smart contracts across market infrastructure. Officials also described tokenized securities as a broad category that can apply to both debt and equity products, rather than a niche asset class.
Benefits and Potential Impact
Government officials highlighted potential benefits for non-standard investment contracts that have historically faced distribution restrictions, such as securities tied to real estate, works of art, or agricultural projects. By incorporating these products into a regulated STO framework, authorities aim to expand investor access while maintaining oversight. The implementation will be led by the FSC, working with the Financial Supervisory Service, the Korea Securities Depository, and industry participants.
Market forecasts suggest the opportunity could be significant, with Standard Chartered predicting that tokenized real-world assets could reach a market cap of $2 trillion by 2028. Boston Consulting Group estimated that South Korea’s tokenized securities market alone could grow to nearly 367 trillion won ($249 billion) by the end of the decade. Local financial groups such as Mirae Asset Securities and Hana Financial Group have already started building platforms in anticipation of the new rules.
Next Steps and Timeline
After legislative approval, the bills are submitted to the State Council before being officially promulgated by the President. The laws are scheduled to come into force in January 2027 after a year of preparation. An advisory panel is expected to meet as early as next month to develop supporting infrastructure, including ledger-based account management systems and additional protections.
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