In Brief: South Korea proposes capital and staffing requirements for qualifying tokenized securities issuers alongside annual retail purchase limits on OTC exchanges. South Korea’s three-phas
South Korea has proposed a 4 billion won capital requirement for qualifying tokenized securities issuers and annual retail trading limits. According to the announcement, the proposals cover securities issuance, customer account management, and OTC trading, requiring issuers directly managing customer accounts to hold at least 4 billion won, approximately $2.8 million.
These issuers would also need one account management professional, one internal control specialist, and two information technology professionals. The requirements form part of the proposed issuer account management entity system under the Electronic Registration Act.
Proposed capital markets revisions would introduce an additional over-the-counter exchange license for debt securities alongside existing licensing categories. Retail investors would face an annual net purchase limit of 100 million won, approximately $70,000, on each OTC exchange.
Eligible securities would include stocks, bonds, funds, and fractional investment products structured as trust beneficiary certificates or investment contract securities.
The commission proposed revisions under the Financial Investment Services and Capital Markets Act and the Electronic Registration Act. Both sets of subordinate regulations support the legal framework scheduled to take effect on February 4, 2027.
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The proposals follow a three-phase roadmap that the FSC introduced on September 4 with securities companies and the Korea Securities Depository. Its initial phase covers privately pooled money market funds and bonds reserved exclusively for institutional investors. Unlisted stocks through trust structures and publicly offered fractional investment securities also fall within the initial rollout.
The second phase would expand tokenization to all publicly offered securities types, following assessments of the initial implementation. Authorities would pursue securities payment infrastructure linked to stablecoins during the final phase, subject to technology developments and legislation.
The FSC has left the timing of later phases flexible, citing implementation results, market adoption, and pending stablecoin legislation.
Existing financial investment businesses could handle tokenized securities within their licensed activities without obtaining separate authorization exclusively for tokenization. OTC intermediaries would need prior consultation with the Financial Supervisory Service before arranging tokenized securities transactions.
The proposals require at least two account management entities to share distributed ledgers alongside the Korea Securities Depository. They would also prohibit direct fees for ledger use to prevent disruptions in confirming securities rights.
The depository would screen ledger connections and conduct operating tests when securities companies apply to connect their systems. Its guidelines include contingency plans for system errors and require firms to maintain operational stability when introducing distributed ledger technology.
Public consultation runs from October 2 through November 11, with successive approval procedures scheduled afterward. The FSC plans to implement the regulations on February 4, 2027, alongside amendments recognizing distributed ledgers for securities issuance and circulation.
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