By Michael Scott
South Korea’s financial regulator is set to integrate security tokens within the scope of capital markets rules. The Financial Services Commission (FSC) revealed in a February 6 statement that the revised guidelines recognized that traditional securities with blockchain-based iterations would legally be subjected to the capital markets rules.
Subjecting Securities Token to Capital Markets Rules
The revised guidelines coincide with the much-hyped regulations anticipated to facilitate the institutionalization of security tokens. In particular, the country’s legislative authority is yearning for a comprehensive regulatory context for the blockchain and crypto sectors.
South Korea’s lawmakers have acknowledged reviewing 17 distinctive crypto-oriented legislative frameworks. The discussions target delivering an encompassing legal framework through the Digital Asset Basic Act (DABA) to harmonize oversight over the dynamic crypto industry.
The guidelines specified that the security tokens would leverage the distributed ledger technology (DLT) though representing the digital ownership of assets. The security token offering (STO) matches the initial coin offering though the units involved have security identification.
Exclusion of Stablecoins and Anonymously Issued Cryptos
The guideline echoed the Capital Markets Act, where security tokens are considered digitized assets that leverage distributed ledger technology. Nonetheless, the guidance indicated that the oversight covers only the qualified assets.
The revised guideline ruled out the inclusion of stablecoins from the security tokens category. The guidance acknowledged that the stablecoins involve unique cryptos pegged to fiat currency value. It demonstrated stablecoins are often utilized in settling payments as the medium of exchange.
Besides Stablecoins, FSC excludes digital assets with the anonymous issuer and those noncompliant with the obligations matching the investor’s rights from security tokens’ scope.
Facilitating Innovation and Consumer Protection
FSC clarified that the digital assets included within the security tokens are those whose issuance and distribution comply with regulatory provisions outlined in the Capital Markets Act. The rules are set to facilitate innovation without compromising consumer protection.
The guidelines issued on Monday by FSC restated the devotion to catalyzing institutionalizing process during the initial half of 2023. Its accomplishment would involve FSC lobbying the National Assembly to expedite amending the Electronic Securities Act and Capital Markets Act.
The amendments will ease the issuance of security token offering in a manner promoting innovation while minimizing crimes.