The South Korean government will release amendments to subordinate regulations and guidelines for the tokenized securities legislation in July. Issuance of fractional investment securities backed by pooled underlying assets of the same type will be partially permitted, paving the way for "portfolio-type fractional investments."
The Financial Services Commission (FSC) announced the plan during the second meeting of the public-private Tokenized Securities Council on Tuesday. The council, comprising government officials, related institutions and private-sector experts, was formed to design detailed systems covering technology, infrastructure, issuance, distribution and settlement ahead of the implementation of the tokenized securities legislation in February next year.
"We will support innovative attempts by fintech and the financial investment industry within a reasonable scope," FSC Vice Chairman Kwon Dae-young said in his opening remarks. "Although issuing fractional investment securities by pooling underlying assets is currently prohibited, we will pursue measures to allow it for assets of the same type within a certain scope." Once fractional investment products bundling underlying assets of the same type within a set scale are launched, diversified investment will become possible in the fractional investment market. The final version of the best-practice standards for fractional investment issuance is scheduled to be announced in July, following discussions within the council and additional input from the industry.
The council also discussed expanding the scope of assets eligible for tokenization and preparing the infrastructure. Globally, tokenization is being attempted not only for new types of securities such as fractional investments but also for conventional securities including stocks, bonds and money market funds (MMFs). In line with this global trend, the council decided to establish a detailed phased roadmap within Korea's tokenized securities ecosystem.
Regarding the distribution of tokenized securities, participants shared views on market structure design, including licensing requirements for over-the-counter exchanges, the permissible scope of concurrent business operations and trading limits for investors. The council reached a consensus on the basic direction that market structure design must enhance trading efficiency while ensuring fair competition and investor protection. Participants also discussed the trading limits for retail investors at over-the-counter exchanges, which the amended tokenized securities act delegates to the enforcement decree, agreeing that the limits should be set in a way that does not constrain innovation in the early stages of market formation.
"Designing the system is highly challenging because tokenized securities represent an evolving market without clearly established global standards or definitive answers," Kwon said. "We must closely monitor new technologies and business attempts from a global perspective and continuously seek the optimal form that aligns with the environment and institutions of our capital market."
