South Korea Backs Tokenized Securities With New Law

South Korea’s lawmakers have approved a new amendment that clearly allows the issuing and trading of tokenized securities.

This move put South Korea among the global leaders investing in tokenization. It also shows strong government support for blockchain technology in traditional finance.

Lawmakers Create a Legal Framework for Tokenized Securities

During a recent plenary session, South Korea’s National Assembly greenlit changes to the Capital Markets Act and the Electronic Securities Act. These changes officially recognize blockchain-based securities and allow approved issuers to legally issue digital securities, giving the market clear rules.

At the same time, amendments to the Capital Markets Act allow these tokenized assets to trade through brokerages and licensed financial intermediaries. The law clearly treats these digital tokens as securities tied to investment contracts. 

This means they are regulated in the same way as traditional financial securities. By doing this, the government makes sure these assets stay under the existing legal and regulatory system, instead of creating an entirely new set of rules.

This legal change follows another important policy decision. South Korea’s Financial Services Commission recently approved new rules that allow companies and institutional investors to trade digital assets. For almost nine years, corporations were largely banned from taking part in the digital asset market.

By lifting these restrictions, regulators signaled a major change in their approach. The government is now moving away from strict limitations, showing greater trust in digital assets while still keeping strong oversight in place.

Blockchain Integrated Into South Korea’s Financial System

South Korean regulators designed the new rules to add blockchain to existing financial systems, not replace them. Officials see tokenization as an upgrade that improves efficiency while preserving investor protection and regulatory oversight.

Under the new rules, financial accounts can operate through distributed ledgers. This approach improves transparency and allows wider use of smart contracts during the issuance, trading, and settlement of securities. 

As a result, market processes can become faster, more automated, and more reliable. Following parliamentary approval, the bill will move to the State Council before receiving presidential approval. 

Officials expect the process to move smoothly. Once approved, the new laws will take effect in January 2027, giving the market time to prepare.

Global Interest in Tokenization Gains Momentum

South Korea’s actions align with growing global interest in asset tokenization. U.S. regulators recently issued guidance to lower barriers for institutional use of tokenized assets. This reflects a wider global trend.

Major financial institutions have already begun using tokenization. JPMorgan recently launched a tokenized money market fund built on the Ethereum blockchain. This shows how traditional finance is increasingly using blockchain technology.

Experts also predict strong growth, with South Korea’s tokenized securities market possibly reaching $249 billion by the end of the decade and the global market growing to $2 trillion by 2028.