The Korean government has formed a joint public-private council to design detailed systems and infrastructure for tokenized securities and held its inaugural meeting. The council plans to establish regulatory design directions within the first half of the year and discuss related issues before the institutionalization law takes effect next year.
Financial Services Commission Chairman Lee Eok-won announced the council's operational plans at the kickoff meeting held at the Seoul Government Complex on the 4th. "Considering the development trajectory of blockchain technology, tokenized securities are not a temporary trend but are expected to become a pillar supporting the structural convergence of capital markets," he said.
Tokenized securities refer to securities issued and managed using blockchain-based distributed ledgers as securities account books. The institutionalization law for tokenized securities passed the National Assembly plenary session in January and is scheduled to take effect on February 4 next year. The council, jointly formed by government and private sector entities including the Financial Services Commission, Financial Supervisory Service, Financial Security Institute, Korea Securities Depository, Telecommunications Technology Association, Korea Financial Investment Association, and Fintech Industry Association, plans to discuss subordinate legislation and infrastructure development.
Chairman Lee presented three major policy directions for tokenizing securities. The first is "creating a digital innovative finance ecosystem with diversity and scalability." Tokenized securities can efficiently implement non-standardized rights and customized infrastructure for various new securities—including music rights, artworks, Korean beef and pork livestock businesses, and real estate—through blockchain-based smart contracts (program-based contracts that automatically execute when certain conditions on the blockchain are met). The council will overhaul the entire regulatory framework covering issuance, distribution, and disclosure to enable such tokenized securities.
The second direction is "establishing a customized investor protection system." The council clarified that tokenized securities are essentially securities and that investor protection is a fundamental principle of capital market regulation. "We need to examine in detail whether current investor protection mechanisms are compatible with tokenized securities and make improvements," Chairman Lee said. "Rather than simply applying existing regulations, we will sophisticate the investor protection system to match the characteristics of tokenized securities."
The third direction is "preparing the future of securities settlement systems, including on-chain payment." Some foreign countries are attempting to support 24-hour, T+0 settlement (enabling same-day withdrawal of transaction proceeds after selling securities) for securities through systems that settle tokenized securities with stablecoins. This maximizes settlement efficiency through so-called on-chain payment, where both securities and payment instruments are paid and settled on the blockchain. "We will design the tokenized securities system and infrastructure while considering linkages with stablecoins to be introduced through future National Assembly discussions on the Digital Asset Act, as well as future scalability," Chairman Lee explained.
The tokenized securities council consists of four subcommittees—technology and infrastructure, issuance, distribution, and settlement—and will operate on a standing basis. For subcommittee meetings, an advisory pool of various experts and market participants will be formed to gather wide-ranging opinions, and they will also participate as subcommittee members to support regulatory design.
