The South Korean government is very open to cryptocurrencies as an asset class.
To provide the necessary regulation for the fledgling cryptocurrency ecosystem, South Korea has issued new guidelines on security tokens.and press release The Financial Services Commission (FSC), which went public on Monday, highlighted how digital currencies should be treated based on their classification of securities.
Security tokens, as defined by regulators, refer to the digitization of securities using distributed ledger technology (DLT) under the Capital Markets Act. The regulator said a security is considered an investment if investors are not required to make an additional top on the initial purchase in accordance with capital market law.
South Korean regulators also pointed out that security tokens imply that the holder owns an equity stake in a business or project. Riding on this stock, the regulator said token holders would receive a share of the company’s dividends or profits. As far as FSC is concerned, tokens falling under this definition are regulated under capital market law.
Tokens that do not fit this definition, on the other hand, will be regulated by the relatively new Digital Assets Regulation, which is still in development. The Financial Services Commission (FSC) said the determination of whether a token is a security will be made on a case-by-case basis.
The decision will be made by the party responsible for issuing the token, the regulator said. This extends to the crypto trading platform, or the parent company that issues the tokens.
“In the case of token securities, the responsibility for reviewing and determining security approvals and for complying with securities regulations rests with the party seeking to issue, distribute and process the token security. It is equivalent to determining whether a company has met its obligations under capital market law, such as disclosure,” the announcement said.
South Korea and its stance on crypto regulation
The South Korean government is very open to cryptocurrencies as an asset class. As one of Asia’s vibrant hubs for digital currencies, the government is very proactive in its regulatory approach to the emerging industry.
Comprehensive digital asset regulation is still in the works, but the country has shown positive directions, such as attracting private partnerships in developing the country’s crypto landscape. South Korea is a country with plenty of calls for virtual currency tax regulation, but it is not yet fully implemented.
South Korea, which has zero tolerance for cryptocurrency-related fraud, has pushed out trading platforms that do not work with traditional financial institutions in 2021.
The country recently announced plans to set up an advanced crypto monitoring and tracking system to help combat crypto fraud.
Benjamin Godfrey is a blockchain enthusiast and journalist who enjoys writing about real-world applications and innovations in blockchain technology, driving general acceptance and global integration of emerging technologies. His desire to educate people about cryptocurrencies has inspired his contributions to famous blockchain-based media and sites. Benjamin Godfrey loves sports and farming.