BlocksInform
South Korea's Financial Services Commission (FSC) on Monday published guidelines on which blockchain-based iterations of traditional securities, known as security tokens, will qualify for regulation under the country's capital markets rules.
The guidance comes ahead of highly anticipated regulations that will institutionalize security tokens.
South Korea is working to regulate the crypto and blockchain sector comprehensively, with lawmakers of the country's National Assembly considering 17 separate crypto-related legislative frameworks. The discussions aim to create the basic law on digital assets (daba), a global legal framework for the regulation of the dynamic crypto industry in Korea.
Read more: South Korean Lawmakers Are Gearing Up to Regulate Crypto. What Could That Look Like?
Security tokens refer to the digitalization of securities under the Capital Markets Act using distributed LEDGER technology, according to the guidance, and will apply only to digital assets that qualify. The guidance states that stability is required, which are crypto-currencies linked to the value of other currencies such as the United States dollar and which are used for payments or as a means of exchange, are unlikely to fall within the scope of the title definition. Digital assets that have no issuer and do not have to "fulfill the obligations commensurate with the investor's rights," will also likely fall outside of the scope of security tokens.
"on the other hand, digital assets for securities must be issued and distributed in accordance with all securities regulations under the Capital Markets Act," said the fsc.
The rules are intended to support innovation while protecting consumers, in accordance with the Directives.
"During the first half of 2023, we will support institutionalization by submitting to the National Assembly amendments to the Electronic Securities Act and the Capital Markets Act," said the fsc.
