[Edaily Marketin Song Seung-Hyeon YunJi Kim Reporter] "We will provide clear and transparent guidelines to facilitate rapid innovation. If verification proceeds smoothly, we may be able to accelerate the timeline for opening the market."

Financial authorities have outlined the criteria for opening the security token offering (STO) market, focusing on the clarification of rights and the structure of liability. The plan is to proceed in a phased yet expedited manner, starting with private, permissioned blockchains capable of clearly defining rights and liability structures, and eventually expanding to public blockchains following verification. On the same day, the Financial Services Commission (FSC) also announced a proposed amendment to subordinate regulations that would allow stocks, bonds, and funds to be issued as security tokens.

Go Young-ho, Director of the Capital Markets Division at the Financial Services Commission, said during a panel discussion at the “STO Summit 2026” held at the Korea Exchange Conference Hall in Yeouido, Seoul, on the 1st, “Legislation is not the end but a broad beginning,” adding, “Since a distributed ledger is not merely a database but a legal ledger that establishes rights, we started with a private, permissioned ledger, which can most clearly implement the establishment of rights and a structure of responsibility.”

The STO Summit, held over two days starting on the 1st, was part of Korea Premium Week 2026. Its inclusion in the three-week national investor relations (IR) event organized by the Financial Services Commission and the Korea Exchange to promote the Korean capital market reflects the expectation that tokenized securities will establish themselves as a major means of fundraising and investment in the future.

On the first day, the highlight of Track 1—which discussed policy directions following the legalization of tokenized securities in Korea—was a panel discussion titled “Tokenization 2.0: Beyond the Regulatory Framework to Building a Substantive Ecosystem.” Yoon Chang-hyun, CEO of Koscom—who spearheaded the introduction of the STO bill in the 21st National Assembly—served as moderator. Panelists included Min Byung-deok, a member of the Democratic Party of Korea who led the passage of the relevant legislation in the 22nd National Assembly; Ko Young-ho, a section chief at the Financial Services Commission who helped shape the market guidelines; and Matthew French, Global Program Manager at Franklin Templeton, who has been involved in the tokenized securities regulatory frameworks in Singapore and Hong Kong.

Rep. Min Byung-deok said, “When we first began discussions in 2020, the conversation was at the level of ‘Why do we need cryptocurrencies?,’ but now we’re only discussing how to accelerate the process,” adding, “Just as the 50,000-won bill gained value because people placed their trust in it (unlike when it was first introduced), the same will be true for digital assets.”

Stocks, Bonds, and Funds to Become Tokenized Securities… Gradual Expansion in Phases

Director Ko presented a plan for a phased expansion, starting with money market funds (MMFs) and corporate bonds for institutional investors, followed by public offerings to individuals and on-chain payments. He explained, “Since tokenized securities are not a new type of security but rather a change in how rights are recorded, we need to verify whether the existing regulatory framework functions properly,” adding, “We will begin with MMFs and corporate bonds—which have simple rights structures—targeted at institutional investors capable of independently assessing risk, and use this to validate the infrastructure.”

The Financial Services Commission announced today that it will conduct a legislative notice period from the 2nd through November 11 for amendments to subordinate regulations under the Capital Markets Act and the Electronic Securities Act, which contain detailed standards necessary for the issuance and distribution of tokenized securities. This aligns with the amendments to the Capital Markets Act and the Electronic Securities Act regarding token securities, which are scheduled to take effect on February 4 of next year. The amendments allow not only fractional investment securities—such as non-monetary trust beneficiary certificates and investment contract securities—but also existing standardized securities, such as stocks, bonds, and funds, to be issued as token securities. The investment limit for retail investors on over-the-counter (OTC) token securities exchanges is set at 100 million won in annual net purchases per exchange.

Regarding whether public blockchains will be permitted, he emphasized that the key criterion is whether new technology can replace the role of the existing regulatory framework. Director Ko stated, “On some public blockchains, when the network is congested, transactions that pay higher gas fees (blockchain usage fees) are recorded first,” adding, “If a court-ordered seizure and a transfer occur simultaneously, and the order of entries in the ledger differs from the actual transaction sequence, the legal rights and obligations could be reversed.” He further stated, “If a methodology is proposed that implements the determination of rights and the liability structure at the same level, we will review it with an open mind.”

He also highlighted the potential for risk transmission resulting from connectivity with the global on-chain ecosystem. Section Chief Ko remarked, “While connectivity with the global on-chain ecosystem is important, we must also consider the potential for risk transmission between markets,” explaining, “If tokenized securities are used as margin on virtual asset exchanges and virtual asset prices fall, the shock could spread to the tokenized securities market through the sale of collateral.”

Director Ko indicated that the timeline for opening the tokenized securities market could be accelerated depending on the speed of verification. He said, “If technological development and verification proceed quickly, the timeline could be moved up,” adding, “As long as regulatory compliance, investor protection, and market stability function effectively, we can certainly move forward at a rapid pace.”

“Investor Protection” Is the Top Priority Abroad as Well

Even overseas, where the use of tokenized securities is more advanced than in Korea, investor protection was cited as the top priority. Matthew French, Global Program Manager at Franklin Templeton, said, “From the perspective of regulatory authorities, innovation is important, but the top priority is ultimately investor protection,” adding, “Based on my experience working with regulators in Singapore and Hong Kong, striking a balance between the two is extremely difficult.” Franklin Templeton launched its first tokenized money market fund (MMF) in the U.S. in 2021 and has since expanded related products to Europe, Singapore, and other markets.

French noted, “Bringing asset managers, banks, and brokers together under one roof can help establish common standards and enhance interoperability,” but added, “Since each participant has different use cases, reaching a consensus is very difficult, and this could slow down progress in this rapidly evolving field.” He also noted, “If each financial institution is allowed to build its own system, they can develop it quickly and learn from the experience,” but cautioned, “A proliferation of unconnected projects could lead to interoperability issues.”

He said, “Another effective method has been to temporarily exempt certain activities from regulations for a set period under specific conditions,” explaining that “this approach involves conducting experiments within a strictly controlled scope to minimize risk.”