On January 15, 2026, the National Assembly of South Korea voted to pass a comprehensive financial regulatory amendment, officially incorporating Security Token Offerings (STOs) into the existing capital market regulatory framework and electronic registration architecture, marking a specific time coordinate for the traditional securities law to embrace the "blockchain moment." With key revisions completed to core regulations such as the Capital Markets Act and the Electronic Registration Act for Stocks and Bonds, STOs are no longer in a regulatory gray area but are embedded within the existing electronic securities registration and regulatory framework, viewed as a structural expansion of the traditional securities system. This legislative action quickly attracted attention both regionally and internationally, with several research institutions and media outlets describing it as a milestone and potential watershed in the East Asian digital securities regulatory race, indicating that the discourse and standard-setting around compliant tokenized securities are extending from the technological frontier to the mainstream legislative arena.

Old Securities Law Gets Revised: STOs Enter the Formal Capital Market Track

The core of this amendment is not to create a new law specifically for STOs, but rather to simultaneously amend existing pillar regulations such as the Capital Markets Act and the Electronic Registration Act for Stocks and Bonds, directly "adding" the STO module to the existing capital market system framework. The Capital Markets Act defines the regulatory boundaries for financial investment products, issuance, and sales, while the Electronic Registration Act for Stocks and Bonds establishes the institutional foundation for electronic registration, settlement, and rights confirmation. Embedding tokenized securities provisions into these two pillars signifies that the regulatory authorities have clearly chosen the path of "expanding the existing system" rather than establishing a parallel structure. Through this transformation, the foundational framework for the issuance and circulation of STOs is directly written into the existing capital market system, legally regarded as a new form of securities rather than an "alternative asset" existing outside the system. This not only provides a clear conceptual attribution for subsequent product design, issuance processes, and intermediary responsibilities but also lays a practical reference for judicial adjudication, investor protection, and cross-market regulatory collaboration. For this reason, the market has seen evaluations such as "this is the first East Asian country to fully incorporate STOs into the existing capital market regulatory system" (source: A), distinguishing South Korea from previous models that relied on pilot programs, guidelines, or subordinate regulations to explore digital securities. Symbolically, this legislative action labels South Korea's financial regulatory authorities as "willing to accept on-chain innovation within the main board system," which is expected to enhance its institutional attractiveness in the competition with surrounding financial centers in the direction of digital securities and compliant tokenized assets.

From Off-Chain to On-Chain: Blockchain Gains Legal Recognition for Securities Issuance

In contrast to the previous practice of only allowing traditional electronic registration systems as the sole "legal underlying," a significant change in the new amendment is that it allows qualified compliant issuers to directly use blockchain technology to issue tokenized securities, rather than being forced to complete issuance off-chain and then "map" it onto the chain. Research briefs indicate that this reform has been summarized by the industry as "the first time blockchain technology has gained explicit legal status in the field of securities issuance in South Korea" (source: C), meaning that distributed ledgers are no longer just private experiments or technical services but are written into the institutional options for securities issuance. In the envisioned operational scenario, traditional electronic securities registration systems and on-chain distributed ledgers will be interconnected through compliant interfaces: on one hand, centralized registration institutions will still bear the statutory responsibilities for rights confirmation and roster management; on the other hand, on-chain tokens will carry real-time transfer records and programmatic rules, achieving more frequent and transparent updates of holding structures. For traditional brokers and custodians that have long relied on licenses, channels, and custody fees, this step may bring a dual impact on their business models. First, on-chain native issuance weakens the irreplaceability of some traditional "intermediary links," pushing intermediaries to transition from mere channels to compliance consulting, structural design, and technical integration services; second, technology service providers and blockchain infrastructure providers are pushed to the forefront, becoming key pieces in the compliant issuance chain, forcing established institutions to reconstruct their systems, interface standards, and cooperation models. Over a longer period, this combination of "on-chain direct issuance + compliant registration" may give rise to a new type of intermediary form centered on compliant tokenized securities.

New Role in Account Management: A Buffer Zone Between On-Chain Accounting and Regulatory Visibility

To build a buffer zone between on-chain securities accounting and regulatory visibility, the amendment introduces the issuer account management institution system, adding a key new role to the STO ecosystem. Structurally, this institution is positioned between the issuer and investors, facing the on-chain tokenized accounting logic while needing to stay synchronized with the offline registration system and regulatory reporting system, thus becoming a core node in the on-chain securities structure. By introducing this intermediary layer, regulators aim to find a balance between "allowing tokens to circulate efficiently on-chain" and "ensuring real-time regulatory oversight of rights relationships and risk aggregation": on-chain transactions can maintain strong automation and composability, while the account management institution is responsible for aggregating fragmented on-chain data into a regulatory-readable account view and filtering for technical and compliance purposes when necessary. In terms of functional division, the account management institution is likely to play a dual role as both a compliance gatekeeper and a technical interface—responsible for screening qualified entities during the account opening and issuance phases, implementing necessary identity verification and risk warnings, while also building and maintaining interfaces with the blockchain layer, smart contracts, and central registration systems to ensure data consistency and traceability. In regulatory expectations, this design is hoped to play a "valve" function in anti-money laundering, abnormal transaction identification, and investor protection, for example, helping to identify suspicious funding paths and preventing complex products from being mis-sold to inappropriate groups. However, there are also concerns in the market: excessively high compliance costs and technical thresholds may compress the survival space for small innovative entities, leading to new controversies between this new system's risk reduction and the increased barriers for intermediaries.

Divergence in the East Asian Track: Speed and Certainty Under Three Regulatory Paths

Fully embedding STOs into the existing capital market regulatory framework represents a clear path choice for South Korea in the East Asian digital securities track. Rather than saying South Korea is creating a "parallel universe," it is more accurate to say it has opened a "chain extension zone" within the existing securities law universe, allowing tokenized securities to be included in the same regulatory context as traditional stocks and bonds from the outset through the amendment of the main law rather than through subordinate guidelines. This approach sharply contrasts with the recent practices of Japan and Singapore: Japan tends to delineate independent tracks for different forms of digital securities and tokenized assets through targeted new licensing categories and tiered regulatory requirements; Singapore, on the other hand, emphasized sandboxes, pilot programs, and principled regulatory guidelines for a period, supporting new models to experiment within a controllable range with higher flexibility and regulatory discretion. The three paths differ in their trade-offs between innovation speed, legal certainty, and regulatory costs. South Korea's main law embedding scheme has advantages in textual certainty and judicial predictability, facilitating institutions to layout medium- to long-term projects under clear compliance boundaries, but it may also slow down the pace of future legislative amendments, requiring more time for detailed adaptation to the characteristics of new technologies; Japan and Singapore's "new licensing/sandbox" models allow pioneers to experiment quickly within a more relaxed framework, but they also face the real pressure of frequent rule adjustments and blurred boundaries of investor protection. As South Korea incorporates STOs into the capital market mainstream, there is potential for a redistribution of the flow of funds and project locations within the region: on one hand, projects seeking high compliance certainty and institutional funding connections may be more willing to view South Korea as one of the options for long-term establishment or issuance; on the other hand, teams pursuing high-frequency product iterations and strategic experimentation may still be motivated to conduct early explorations in jurisdictions with a deeper tradition of "new licensing/sandbox."

Regulatory Major Cases Overlap with Binance's New Products: Resonance of Compliance Narratives and Risk Preferences

In terms of timing, this round of amendments coincided with the launch of new tokens by Binance Alpha, providing a dramatic backdrop for market sentiment. On one side, South Korea is constructing a compliant issuance and circulation framework for STOs through amendments to core regulations such as the Capital Markets Act; on the other side, leading trading platforms are launching new categories of tokens, continuing the path of driving trading activity and narratives through product innovation. The simultaneous emergence of both has been interpreted by many as a "response in market narratives between major regulatory cases and platform new products" (source: A/B). On a superficial level, compliant security tokens and exchange innovative products both revolve around "tokenization," but their positions differ greatly in terms of compliance boundaries and risk perceptions: the former is locked within the scope of securities constrained by the Capital Markets Act, prioritizing investor protection, information disclosure, and systemic risk control; the latter, however, often remains within a pool of assets characterized by high volatility and speculation, with risk identification relying more on internal exchange rules and investor self-judgment. When "legislation and new products" resonate within the same time window, it may have complex impacts on funding styles and expected paths in the short term. Some funds may interpret the implementation of the South Korean STO framework as a signal for institutional allocation of compliant tokenized assets, beginning to focus on medium- to long-term security token projects and infrastructure; another portion may be attracted by the high elasticity of new products like Binance Alpha, continuing the pursuit of high-volatility narratives. The intertwining of these two funding threads in sentiment and discourse will, in turn, influence subsequent legislative interpretations, regulatory enforcement intensity, and the market's re-evaluation of the relative value of "compliant innovation" versus "wild innovation."

The Game Has Just Begun: The Long Tug-of-War from Paper Systems to Real Markets

Although this round of amendments has delineated the regulatory boundaries for STOs at a macro level, the specific qualifications for issuance and secondary circulation rules are currently still absent or awaiting clarification. Without official texts, external parties can only maintain cautious observation regarding issues such as issuer conditions, investor thresholds, leverage, and trading mechanisms, unable to make responsible projections. Discussions around the "three-year transition period" and whether it will simultaneously touch upon broader adjustments to the Capital Markets and Financial Investment Services Act remain at the level of unverified information and should not be regarded as established facts or used to construct medium- to long-term policy path assumptions. It is foreseeable that from legislative texts to market implementation, South Korea's STO regulation will undergo a process filled with trial and error, lobbying, and regulatory arbitrage games: industry participants will engage in intensive lobbying around the formulation of detailed rules, attempting to secure more favorable boundaries between investor protection and business space; regulatory agencies will need to continuously fine-tune the scale between preventing systemic risks and maintaining innovative vitality, preventing rules from being structurally arbitraged. Viewed from a global perspective, South Korea's legislative amendments add a sample of "tokenization embedded within mainstream capital market law" to the digital securities landscape, forming a foundational system for the next cycle of compliant tokenized asset competition alongside new licensing and sandbox paths. It may not immediately change the structure of funding flows but has the potential to amplify the certainty of institutional funds entering this track in the coming years, gradually transforming the symbolic statement of "securities law embracing the blockchain moment" into real asset allocation and market structure changes.

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