• South Korea’s Financial Services Commission (FSC) has published rules outlining which digital assets will be regulated as securities in the country.
• The guidelines state that all blockchain-based tokens will be treated and regulated as securities provided they have inherent characteristics that fit them into the country’s capital market act.
• South Korea has been a leader in its robust engagements with crypto ecosystems, having proposed developments such as a blockchain-based virtual power plant, a decentralized digital commodity market, and the ‘virtual currency tracking system’ to curb money laundering.
South Korean Regulatory Body Gives Security Token Guidelines
Ahead of the proposed legalization of cryptocurrencies in Korea, the financial services commission (FSC) published rules on Jan. 6 that outline which digital assets will be regulated as securities in the country.
Characteristics of Regulated Securities
The guidelines stipulate that all blockchain-based tokens will be treated and regulated as securities provided they have inherent characteristics that fit them into the country’s capital market act. According to the FSC, assets that fall into this category of securities are assets used for staking to derive dividends.
Excluded Assets
In contrast, assets like stablecoins that fall outside the above category will operate following upcoming digital asset regulations.
Accountability
The FSC stated that cryptocurrency and other digital assets‘ security-like financial assets will be assessed on a case-by-case basis and issuers and brokers such as crypto exchanges will be held accountable for doing such evaluations in accordance with set rules.
Supporting Innovation & Consumer Protection
.The new guidelines support innovation and simultaneously ensure consumer protection. The first half of 2023 is expected to promote institutionalization through submitting drafted guidelines for assessments.
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