South Korea establishes comprehensive regulatory framework for the issuance of security tokens

The South Korean parliament recently passed a significant reform package that establishes a solid legal foundation for the issuance and trading of tokenized securities (STO). With this legislative innovation, a comprehensive framework is created for the first time, setting both technical and regulatory standards for the issuance of digital securities. According to PANews, the reform includes amendments to the Capital Markets Act and the Electronic Securities Act.

The technological and regulatory innovations

The reform package introduces the concept of distributed ledgers and allows qualified issuers to issue tokenized securities electronically. At the same time, a specialized administrative body for issuance accounts is established to serve as a central coordinating authority. The regulation covers not only traditional securities but also extends oversight to investment contract securities and other atypical financial instruments. This creates a more comprehensive framework for issuing various forms of security tokens, taking into account the diversity of tokenized financial products.

Phased implementation with different timeframes

The implementation of these legal provisions will occur in multiple phases. The core provisions regarding capital market regulation will come into effect immediately after publication. Advertising requirements for investments will become effective six months after publication, while regulations for over-the-counter trading, which enable securities tokens to be traded outside formal exchanges, will be implemented after one year. This staggered rollout gives market participants time to prepare for the new standards and procedures for issuance.