Korea Establishes Security Token Regulatory Framework

The National Assembly’s recent approval of amendments to the Act on Electronic Registration of Stocks, Bonds, etc. and the Financial Investment Services and Capital Markets Act (FSCMA) marks Korea’s first comprehensive regulatory framework for security tokens. The reforms establish clear legal grounds for securities issued and managed through distributed ledger technology, enabling the tokenization of various real-world assets within the formal capital markets regime.

The introduction of the “Issuer Account Management Institution” allows qualified issuers, subject to governance and technical requirements, to directly operate distributed ledgers and conduct electronic registration. This change reduces reliance on traditional intermediaries and supports tokenization of non-standard assets. The FSCMA amendment also applies full market rules to Investment Contract Securities, resolving prior regulatory gaps and ensuring consistent compliance expectations for participants in tokenized securities markets.

A new licensing category for over-the-counter (OTC) transaction brokerage permits the establishment of multilateral OTC trading platforms for tokenized and atypical securities under tailored oversight and investor-protection measures. This development is expected to enhance secondary-market transparency and liquidity.

The Electronic Securities Act amendment will take effect one year after promulgation, while the FSCMA amendment becomes effective immediately, with OTC provisions applying after one year. Foreign clients pursuing tokenization or cross-border offerings should monitor forthcoming Presidential Decrees, which will define the detailed operational standards. Korea’s evolving STO framework positions the jurisdiction as a leading regulatory environment for compliant digital-asset innovation.

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