SOUTH KOREA Trends and Developments Contributed by: Ohoon Kwon and Yeon Seo, Cha & Kwon Law Offices
Korea’s 2026 Crossroads in Digital Asset Regulation
which took effect on 1 August 2025. Korea has taken a different path, advancing the capital-markets amend- ments while leaving DABA under committee review. The two legislative timetables also diverge. The capital-markets amendments are scheduled to take effect in early 2027, with subordinate regulations being finalised through 2026 in time for the statutory deadline. DABA, by contrast, is unlikely to clear com- mittee before the local elections on 3 June 2026, and its subordinate regulations – the rules that determine how authorisation and disclosure operate in practice – are not expected to be in force before late 2027. For a foreign issuer or service provider, that gap matters: the same Korean compliance framework cannot be built around both timetables at once. Token Security Issuance Becomes Possible The 2026 “tokenised securities reform” consists of co- ordinated amendments to the Capital Markets Act and the Electronic Securities Act, both passed on 15 Janu- ary 2026 and scheduled to take effect in early 2027. While the two amendments together make token security issuance possible from 2027, they operate on distinct legal tracks and should be read separately. The Electronic Securities Act amendment is about the form in which a security is issued. Distributed ledger technology (DLT) now counts as a legally valid elec- tronic registration ledger. Eligible issuers may record rights directly on a blockchain network, with the Korea Securities Depository (KSD) sitting as a node within that ledger. Until now, a Korean issuer wishing to use distributed ledger infrastructure had to do so within the regulatory sandbox, or through a centrally man- aged registry not recognised as a primary register of rights. From 2027, on-chain entries can themselves be the dispositive record of legal title. The amendment applies to all six existing security types. Market con- sensus, however, is that distributed ledger issuance will be deployed mainly for investment contract secu- rities – fractionalised asset-backed and revenue-share instruments, where the commercial case for tokenisa- tion is strongest. Conventional electronic registration is expected to remain the default for debt and equity securities, beneficiary certificates, derivative-linked securities and depositary receipts.
This article examines the five developments most likely to shape Korean market entry over the next 18 months: • the 2026 capital-markets amendments that will permit token security issuance from 2027; • the stalled Digital Asset Basic Act (DABA), on which centralised exchange and stablecoin regula- tion depends; • the first prosecutorial wave under the Virtual Asset User Protection Act (VAUPA) and the parallel expansion of regulatory surveillance over algorith- mic trading; • the phased opening of won-denominated crypto accounts to Korean corporate and institutional holders; and • the personal income tax on virtual asset gains scheduled to take effect in 2027. The throughline is that these developments are advancing on different timetables, and which one matters most depends on what the foreign business intends to do in the market. A joint amendment package to the Financial Invest- ment Services and Capital Markets Act (the “Capital Markets Act”) and the Act on Electronic Registration of Stocks and Bonds (the “Electronic Securities Act”), permitting token security issuance from 2027, passed the National Assembly on 15 January 2026. DABA, which would establish a framework for crypto-asset issuance and disclosure, the licensing of service pro- viders and advisers, and a separate regime for won- pegged stablecoins, is still under committee review. Progress is not expected until the Bank of Korea (BOK) and the Financial Services Commission (FSC) resolve their dispute over stablecoin issuer eligibility. This diverges from the approach taken in surrounding jurisdictions. Japan has brought security tokens with- in the Financial Instruments and Exchange Act and regulates fiat-pegged stablecoins under the Payment Services Act. Hong Kong has run its Securities and Futures Commission’s licensing of virtual asset trading platforms alongside a Hong Kong Monetary Authority licensing regime for fiat-referenced stablecoin issuers,
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