South Korean regulator provides guidance on security tokens

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South Korea has established guidelines that specify what types of digital assets will be considered and regulated as securities in the country.

In a statement, the Financial Services Commission (FSC) Underline that digital assets that match the characteristics set out in the country’s capital markets law will be treated as securities.

This law considers securities as financial investments where investors are not required to make additional payments after their initial investments. Additionally, the FSC has also provided examples of digital assets that will most likely be classified as securities. According to the FSC, this can include tokens that provide participation in trading operations, give holders rights to dividends or residual assets, or provide profits generated by the company to investors.

Cryptocurrencies that match the descriptions of security tokens will be regulated by the country’s capital markets law. Meanwhile, digital assets that do not match the characteristics of securities will be governed by further regulations to come.

According to the FSC, token issuers and brokers like crypto exchanges will be responsible for making the assessments on which crypto will be classified as securities based on the regulations. The regulator also stressed that the assessment will be on a case-by-case basis.

The financial regulator also noted that the new guidelines are part of preparations for legalizing the issuance and distribution of security tokens in the country.

Related: Seoul government opens city’s metaverse project to public

South Korea is an active participant in the crypto ecosystem, with various sectors in the country continuously developing. On January 19, the city of Busan revealed plans to establish a decentralized digital commodity exchange. Government officials noted that the platform is expected to begin operations this year.

Apart from this, the country’s Ministry of Justice is also planning to roll out a crypto tracking system. On January 29, the South Korean government announced that it would introduce a tracking system that aims to combat money laundering efforts and recover funds linked to criminal activity.