SOUTH KOREA Trends and Developments Contributed by: Wooyoung Choi, Suhhee Han, Seonghwan Ju and Matt Younghoon Mok, Lee & Ko
and to the Financial Investment Services and Capital Markets Act (the “Capital Markets Act”) for security token issuance and distribution were passed by the National Assembly on 9 December 2025. The amend - ments (i) permit issuance of electronic securities using distributed ledger technology, and (ii) bring new forms of securitisation, including fractional investment, with - in the institutional framework. Token securities, which had previously operated only through the regulatory sandbox, can now be issued and distributed under the general regulatory regime. Key amendments to the Electronic Securities Act The existing Electronic Securities Act only permitted electronic registration through centralised account books maintained by the Korea Securities Depository and financial institutions. The amended Act introduc - es definitions of “distributed ledger” and “distributed ledger-registered stock”, establishing a basis for using distributed ledgers for electronic registration. Securi - ties issued in token form will now have legal effect under the amended Act. Investment contract securi - ties have been included within the scope of securities subject to electronic registration, enabling fractional investment rights to be issued within the electronic securities framework. The amended Act permits account management institutions and electronic registration institutions to use distributed ledgers for electronic registration and management. Conversion between distributed ledger-registered securities and general electronical - ly registered securities is permitted where consent is obtained from all rights holders or where the securities are listed on a securities market. The amended Act also introduces an “issuer account management institution” system, enabling issuers to directly register and manage securities using distribut - ed ledgers without going through intermediaries. Reg - istration requirements include equity capital of KRW1 billion or more, personnel and IT infrastructure, major shareholder and executive eligibility, distributed ledger suitability, and conflict of interest prevention systems. Violations are subject to criminal penalties. Given the difficulty of deleting information from dis - tributed ledgers, separate management standards for
personal credit information have been established, with management obligations imposed in accordance with Enforcement Decree standards rather than the destruction provisions under the Credit Information Use and Protection Act. Key amendments to the Capital Markets Act The amended Capital Markets Act provides that dis - tribution provisions fully apply to investment contract securities, establishing a legal basis for secondary markets in non-standard securities including fractional investment securities. The amendments also clarify the legal basis for multi- party OTC trading through OTC brokerage operators. Previously, OTC trading was required to be conducted between a single seller and buyer, with limited excep - tions. The amendments permit multi-party OTC trad - ing through OTC brokerage operators and provide specific provisions applicable to such operators. Authorisation procedures for fractional investment OTC exchanges are currently underway. Effective dates and implications The amended Electronic Securities Act enters into force on 4 February 2027. The amended Capital Mar - kets Act entered into force on 3 February 2026, with OTC brokerage provisions entering into force on 4 February 2027. These amendments are expected to facilitate expansion of tokenised asset transactions in Korea, including real-world asset tokenisation. Market participants should review distributed ledger usage requirements, pre-assess issuer account manage - ment institution registration requirements and monitor The AI Framework Act and its Enforcement Decree entered into force on 22 January 2026. The Act aims to promote AI innovation while ensuring AI safety, accountability and transparency, and has a framework law character encompassing both industry promotion and regulation. Governance framework A National AI Strategy Committee under the President has been established to deliberate on major AI policies Enforcement Decree developments. Enactment of the AI Framework Act Overview
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