South Korea Moves to Bring Stocks, Bonds Into Security-Token Rules

South Korea plans to expand its security-token framework to stocks, bonds and funds, broadening regulated tokenization beyond fractional-investment securities and investment-contract securities.

The Financial Services Commission (FSC) proposed revisions to lower-level regulations that would allow traditional securities to be issued and managed as security tokens. The move would extend the framework to a wider range of capital-market products while keeping them within the securities regulatory system.

The proposed electronic-securities rules would also establish requirements for the distributed ledger used to record tokenized securities. Participants would include an electronic registration institution and at least two account-management institutions.

The rules would prohibit charging direct fees for using the distributed ledger for electronic-registration purposes.