Korea Opens Security Token Offerings to Stocks, Bonds and Funds

South Korea is preparing to widen the range of assets that can be offered as tokenized securities, with stocks, bonds and funds set to become eligible under revised financial regulations taking effect next February.

The Financial Services Commission said amendments connected to the Capital Market Act and the Electronic Securities Act will support the change. More detailed subordinate rules are also being revised so that conventional financial assets, including equities and bonds, can serve as the underlying assets for digitally tokenized securities.

The move gives clearer regulatory footing to security token offerings, which use distributed digital records to represent investment rights while remaining subject to securities rules. Unlike cryptocurrencies that circulate without a claim on a conventional asset, security tokens are designed to embody regulated financial rights. Bringing stocks, bonds and investment funds within the framework could expand the products available through Korea’s emerging tokenized-finance market.

The regulator’s latest proposal follows legislative changes announced on Sept. 4. The February implementation timetable provides financial companies and market operators with a defined window to prepare systems and compliance procedures for the new regime. Detailed rules will be critical because tokenization changes how ownership interests are issued, recorded and transferred, even when the underlying investment remains familiar.

Retail participation will face a safeguard in the planned over-the-counter market. Individual investors will be limited to 100 million won in annual net investment, equivalent to about $73,700. The cap indicates that regulators are seeking to encourage a new distribution channel while containing the risks that can arise in a market with limited operating history and potentially less liquidity than established exchanges.

The framework also signals that Seoul’s approach is to place tokenized securities inside existing capital-market oversight rather than treat them as an entirely separate asset class. That distinction matters for issuers and intermediaries, which will need to align digital issuance with rules governing investor protection, disclosure and the handling of securities.

The inclusion of funds alongside stocks and bonds could broaden the practical reach of the market. It may allow a variety of investment claims to be represented in smaller digital units, although the products that ultimately reach investors will depend on the final subordinate rules and the infrastructure established for trading.

With the core legal revisions scheduled to take effect in February, the next phase will center on implementation. Regulators and market participants must translate the amended laws into operational standards while ensuring that the convenience of digital issuance does not weaken the protections applied to conventional securities.