South Korea to Publish Tokenized Securities Framework in July; Fractional Investment Rules Target 2027 Launch

South Korea is preparing to roll out a full regulatory framework for tokenized securities, with detailed rules slated for release this summer as regulators work toward a February 2027 start date. The Financial Services Commission (FSC) said Friday it will present its tokenized securities framework in July at the second meeting of the public-private Token Securities Council, which was launched in March. The move follows the National Assembly's passage earlier this year of the Token Securities Institutionalization Act, amending the Electronic Securities Act and the Capital Markets Act. The law takes effect on February 4, 2027. Under the FSC's plan, qualified issuers would be permitted to issue tokenized securities using distributed ledger technology. These instruments would be tradable as investment contract securities via brokerages and other licensed intermediaries. The regulator plans to draft subordinate regulations and guidance to support the new regime, with FSC Vice Chairman Kwon Daeyoung stressing that the "upcoming token securities ecosystem must strike a balance between innovation and trust." The FSC is also developing a phased roadmap to tokenize standardized securities such as stocks and bonds and to support on-chain settlement, citing international best practices. On eligibility and permissible underlying assets, Kwon said the FSC would adhere to market order and investor protection while avoiding a "one-sided regulatory approach." Rules are expected to allow fractional investment securities by pooling underlying assets of the same type within defined limits. The FSC also plans to set trading limits for over-the-counter (OTC) venues, aiming to support early-stage liquidity while embedding investor safeguards so that restrictions do not hinder innovation. The tokenized securities framework is part of South Korea's broader digital-asset policy agenda, alongside long-delayed crypto tax legislation. The Income Tax Act provisions taking effect January 1, 2027 will impose a 20% income tax on crypto gains (about 22% including local taxes). The National Tax Service (NTS) has begun "full-scale preparations," including collecting exchange data to build a tax base, drafting taxpayer guidance, and setting capital gains calculation criteria. Efforts to repeal or delay the crypto tax—including a People Power Party bill and a petition with more than 30,000 signatures—are seen as unlikely to change the 2027 timeline, according to reports. Lawmakers have also called for stablecoin legislation to be prioritized; the measure has been stalled since late 2025 amid disagreements between the Bank of Korea and the FSC. Key dates - July: FSC releases the draft framework at the Token Securities Council meeting. - January 1, 2027: Crypto tax provisions under the Income Tax Act take effect. - February 4, 2027: Token Securities Institutionalization Act comes into force. If implemented as planned, the framework could broaden access to tokenized products in traditional capital markets, enable fractional ownership of stocks and bonds, and clarify compliance obligations for intermediaries and tax authorities. For exchanges, asset managers, and investors, the next 12–18 months will be pivotal as detailed rules, tax guidance, and market infrastructure are finalized.