[Edaily Marketin Won Jae-yeon Reporter] While amendments to the Electronic Securities Act and the Capital Markets Act—which establish the legal framework for security token offerings (STOs)—have been finalized, detailed standards for actual issuance and distribution have yet to be released. As the announcement of revised subordinate regulations and guidelines has been delayed, businesses preparing for the system’s implementation next February are facing a tight schedule.

According to the financial investment industry on the 30th, the amendments to the enforcement decrees and supervisory regulations, as well as the guidelines related to security tokens currently being prepared by the Financial Services Commission (FSC), are expected to be released next month. The FSC had previously announced in May at a public-private joint security token consultative body that it would release the amendments to subordinate regulations and the guidelines in July.

Six months until implementation… Follow-up procedures also lined up

The amended Electronic Securities Act and Capital Markets Act, which passed the National Assembly last January, are scheduled to take effect on February 4 of next year. The amended laws allow distributed ledgers to be used as securities account ledgers and establish the legal basis for the over-the-counter (OTC) trading of investment contract securities and the brokerage of OTC transactions in profit-sharing securities.

However, the registration requirements for issuer account management institutions, trading limits for retail investors, and authorization criteria for over-the-counter exchanges by securities type must be specified in the enforcement decree and supervisory regulations. The guidelines are expected to cover requirements for the underlying assets of fractional investment, disclosure standards, the scope of permitted pooling, and plans for the tokenization of standardized securities.

The specific methods and sequence for tokenizing standardized securities—such as stocks, bonds, and money market funds (MMFs)—have not yet been determined. The Korea Securities Depository (KSD) is building infrastructure to connect its existing electronic securities system with distributed ledgers and to manage the total issuance volume of tokenized securities. However, future roadmaps must specify how distributed ledger records will be reconciled with existing securities account ledgers and how post-trade settlement will be integrated with existing financial networks and on-chain methods.

Even if draft amendments to subordinate regulations are released in August, subsequent procedures—such as the legislative notice period, regulatory review, and review by the Ministry of Government Legislation—remain. Once the final regulations are confirmed, the time available for operators to overhaul their IT systems and internal control frameworks may be shorter than the six months remaining until the law takes effect.

Product Standards Undecided… OTC Exchanges Also Face Delays in Business Plans

The aspect drawing the most attention from the industry is the “pooling” standard, which bundles underlying assets of the same type into a single product. While pooling multiple real estate properties or music tracks together can reduce risk concentrated in a single asset and increase the product’s scale, actual product design is only possible once the scope of assets of the same type, the maximum number of assets that can be included, and whether asset replacement is permitted after issuance are determined.

Trading limits for retail investors have not yet been finalized either. Setting investment limits low would strengthen investor protection but could restrict market liquidity. Conversely, raising the limits would help stimulate trading but could increase the risk of investor losses, so financial authorities are reviewing an appropriate level.

The scope of permitted pooling and the trading limits will determine the number of products the OTC exchange can handle and the expected trading volume. KDX and NexChange, which have received preliminary approval for an OTC exchange for income securities, are currently working on integrating with securities firms and building trading systems, with the goal of applying for full approval in August and launching the market in the fourth quarter of this year.

The products these two exchanges intend to handle initially are existing electronically registered income securities issued through trusts involving assets such as real estate and music rights. It has not yet been determined whether income securities and investment contract securities issued via distributed ledger technology after the law takes effect next year can be handled under their existing licenses, or whether separate reviews or additional authorizations will be required.

Even After Enforcement Decree Is Issued, Amendments to Trust-Related Laws Remain

Even if subordinate regulations are finalized, areas requiring additional legislation remain. Securitizing non-traditional assets, such as patents and content copyrights, requires a trust structure that isolates the underlying assets from the issuer’s risk of insolvency; however, current law restricts the issuance of beneficiary certificates for non-monetary trusts. There are also significant restrictions on trust companies subcontracting asset management duties to specialized institutions.

Recently, following real estate fractional investment firm Casa’s suspension of new public offerings and its move to sell off its held assets, Funble also terminated its services after failing to meet the capital requirements necessary for a license to broker investments in beneficiary certificates. Industry observers believe that even if the Token Securities Act takes effect, unless trust regulations are revised, the products available in the early market may be limited to certain existing assets such as real estate and music rights.

An STO industry official stated, “The system cannot be finalized through subordinate regulations alone,” adding, “Since the issuance of income securities for non-monetary trusts and the re-delegation of duties by trust operators require amendments to the law, these issues must be addressed alongside trust-related legislation to be considered by the National Assembly’s Political Affairs Committee in the second half of the year.”