A South Korean Government Agency Advises On Security Tokens

The country’s Capital Markets Act will govern digital assets that meet the definition of security tokens.

South Korea established rules governing which digital assets will be treated as securities and regulated in the country.

Digital assets that fulfill Capital Markets Act standards will constitute securities, according to the Financial Services Commission (FSC).

This law says that securities are investments that investors don’t have to pay after the initial investment. The FSC also gave examples of the kinds of digital assets most likely to be considered securities.

According to the FSC, this might include tokens that offer investors a stake in how a corporation functions, grant holders the right to dividends or remaining assets, or give investors a piece of the company’s revenues.

The country’s Capital Markets Law will regulate cryptocurrencies that look like security tokens. In the meantime, other rules will soon be put in place to govern digital assets that are not securities.

Token issuers and brokers like crypto exchanges will select whether cryptocurrencies are securities under FSC guidelines. The regulator also noted that each situation would be looked at independently.

The banking watchdog also claimed the new regulations are preparations for legalizing security tokens.

South Korea has been an active part of the crypto ecosystem, and different parts of the country are constantly growing. The city of Busan announced on January 19 that it wants to set up a decentralized digital commodities exchange. Officials from the government said the platform would start to work this year.

The country’s Ministry of Justice also plans to set up a way to keep track of crypto. On January 29, the South Korean government announced a tracking mechanism to fight money laundering and recover unlawful funds.