The South Korean government has taken a major step towards the legalization of cryptocurrencies with the release of new guidelines defining which digital assets would fall under the regulations applicable to financial securities.
On Monday, the Financial Services Commission (FSC) published the guidelines as part of an ongoing review of the digital asset sector and the creation of comprehensive regulations.
According to the FSC, blockchain-based tokens that have the characteristics laid out in the country’s Capital Markets Act will be treated and regulated as securities.
The Capital Markets Act defines securities as financial investment instruments for which investors do not have to make any additional payments beyond the original investment.
Cryptocurrencies or other digital assets that have the characteristics of a security will be governed by the Capital Markets Law, while those outside that definition will be regulated by the newly prepared regulations for digital assets.
The FSC stated that the security-like characteristics of a cryptocurrency or digital asset will be determined on a case-by-case basis, with the responsibility falling on issuers and brokers such as crypto exchanges to make these evaluations in accordance with the regulations.
The new guidelines are part of the FSC’s preparations for the upcoming legalization of the issuance and distribution of securities tokens.
The government aims to allow entities to directly issue such tokens without the involvement of financial institutions and plans to establish an over-the-counter market for securities tokens.
In line with this, Shinhan Securities, the largest securities company in South Korea, announced the formation of the “STO Alliance” to expand the securities token ecosystem.
The FSC will submit a proposal to incorporate these updates into existing financial laws in the first half of 2023.
In conclusion, the new guidelines from the South Korean government represent a significant move towards the legalization and regulation of cryptocurrencies.
The government’s aim to balance the development of the industry with the protection of investors and the stability of the financial system is a positive step for the growth and innovation of the cryptocurrency sector in the country.