Home arrow Article arrow Article Detail

South Korea Issues Guidance Defining Crypto Tokens That Are Securities

Profile Image

Nicholas Otieno Follow


Feb, 08 2023

Feb, 08 2023

likes | comments 0

Article Image

On Monday, February 6, the Financial Services Commission (FSC), a top regulator in charge of regulating financial markets in South Korea, broadened the definition of what kind of crypto tokens are regarded as a security. In other words, the watchdog created a regulation that aims to specify which types of cryptocurrencies will be regarded and regulated as financial securities in the nation.

As per the report, the FSC stated that cryptocurrencies that fit the characteristics associated with securities, as highlighted in the nation’s Capital Markets Act, will be treated and regulated as financial securities such as stocks (shares), bonds, options, etc.

According to the press release, crypto tokens that have characteristics of securities involve digital assets that offer profit to the investors, give holders rights to dividends, or provide a stake in business operations.

The regulator said virtual asset service providers (VASPs) like cryptocurrency exchanges, among others, will be responsible for evaluating which cryptocurrencies are classified as security tokens based on the regulations under the country’s Capital Markets Law. The watchdog further said firms that fail to comply with the regulations concerning the issuance of securities would be violating the rule of law and committing a criminal offence.

Under the Capital Markets Act, security tokens are financial instruments that represent an ownership interest in an asset, digitized by the power of distributed ledger technology (Blockchain) and will apply to cryptocurrencies that qualify as such.

The regulator said cryptocurrencies showing similar characteristics to security tokens must be issued and distributed in accordance with securities regulations as enshrined in the Capital Markets Act.

The FSC said the new regulations are intended to support innovation while ensuring consumer protection. According to the financial watchdog, the new rules are part of preparations for the legalization, issuance, and distribution of security tokens within the nation.

Gearing up to create a safe space for crypto

South Korea has long been considered a major crypto hub in Asia. It is the home of crypto exchange giants such as BitHumb, CoinOne, Korbit, Upbit, and Gopax. Almost 30% of all crypto trading worldwide is contributed by the South Korean market. Currently while the South Korean government legalizes users to own, sell, and buy cryptocurrencies in the nation, such digital assets are not legal tenders.

Crypto assets, exchanges, and VASPs are governed by a strict regulatory framework, including government registration and other regulations oversight by the Financial Supervisory Service of South Korea (FSS).

A week ago, the Ministry of Justice (South Korea) unveiled plans to introduce a crypto-tracking system that will be utilized to monitor transaction history, counter money laundering initiatives, and recover funds associated with criminal activities.



likes | comments 0

Profile Image

Nicholas Otieno

CBW - External Analyst


Data Centre Construction - World First artificial intelligence AI-Tech Utility Token
Animoca Ventures leads $1M seed funding round for Narwhal Finance

With participation from Hailstone Ventures and various angel investors, Narwhal Finance which is a decentralized cross-market perpetual trading platform built on BNB Chain and Arbitrum has announced;

Disclaimer: The information is for informational purposes only.​ This advertisement does not constitute financial advice or any other advice. You should consult with a financial professional to determine what may be best for your individual needs. None of the information and/or content available through this advertisement is intended as an offer or solicitation of an offer to buy or sell, or as a recommendation, endorsement, or sponsorship of any company, financial product, security or commodity. To the maximum extent permitted by law, we disclaim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable or result in any investment or other losses. In Making the investment decision, investors must rely on their own examination of the issuer and the terms of the offerings, including the merits and risks involved. Investments are speculative, illiquid, and involve a high degree of risk , including the possible loss of investment.