South Korea to Expand Tokenized Securities to Stocks, Bonds and MMFs From Feb. 4

South Korea’s tokenized securities market will expand beyond fractional investment products to traditional financial instruments such as money market funds, privately placed bonds and unlisted shares starting Feb. 4 next year. Financial authorities also plan to gradually link the market to tokenized public securities and stablecoin-based on-chain settlement.

The Financial Services Commission announced the policy roadmap on Sept. 4 at the third meeting of a public-private consultative body on tokenized securities.

Beginning Feb. 4, authorities will allow the tokenization of privately placed MMFs for institutional investors and privately placed bonds. For unlisted shares, a new structure will allow existing electronic securities to be placed in trust and then issued and traded as tokenized beneficiary certificates.

The regulatory framework for fractional investment products will also be broadened. Pooling multiple assets with similar characteristics will be permitted under certain conditions. Future receivables may also be used when the underlying contracts and investor protection measures are in place.

After the market is established, authorities plan to expand tokenization to public securities for retail investors. In a final stage, they will review an on-chain settlement structure linked to stablecoin legislation that would allow securities and payment instruments to be exchanged directly on blockchain networks.

The government does not plan to create a separate licensing regime for tokenized securities. Securities firms and over-the-counter trading platforms with existing licenses will be able to handle tokenized securities within the scope of their current approvals.

Financial Services Commission Vice Chairman Kwon Dae-young said tokenized securities would not be confined to fractional investment products. Existing financial products including stocks, bonds and funds would be connected within a digital capital-market framework, he added.

An amendment to the Electronic Securities Act that institutionalizes tokenized securities will take effect on Feb. 4 next year.