South Korea Releases Guidelines on Security Tokens

  • South Korea’s FSC clarified that crypto assets will be treated as security tokens if they have the same characteristics as securities as laid out in the Capital Markets Act.
  • The FSC noted that stablecoins and crypto assets that do not have an issuer will likely not fall under the definition of securities.
south korea


South Korea’s Financial Services Commission (FSC) has published guidelines that specifies which types of digital assets will be considered as securities in the country, the regulator said in a press release on 6 February.

According to the announcement, digital assets will be treated as securities if they have the same characteristics laid out in the country’s Capital Markets Act, which describes securities as financial investments where investors are not required to make additional payments. The FSC noted that his could include tokens that provide profit to the investors, give stake in business operations, or provides rights to dividends or residual assets.

The financial regulator also clarified that stablecoins will likely not fall under the definition of securities, as they are tokens pegged to the value of other currencies and are used for payments and as a medium of exchange. Other assets that will likely not be considered security tokens will be those that do not have an issuer and do not “fulfill the obligations commensurate with the investor’s rights”.

Digital Asset Service Providers, such as token issuers and crypto exchanges, will be responsible for evaluating which digital asset has the characteristics of a security, with each evaluation being done on a case-by-case basis. Crypto assets that fit the description of security tokens will be regulated under the country’s Capital Markets Law, while does that are not qualified as securities will be governed by other upcoming regulations.

These new guidelines are only part of South Korea’s plans to create a comprehensive regulatory environment for the blockchain and crypto sectors. Last year, lawmakers in the country started working on the Digital Asset Basic Act (DABA) bill — a legal framework for regulating the crypto industry in South Korea — and are currently considering 17 separate crypto-related legislative frameworks.

Related Coverage
Binance Acquires Majority Stake in GOPAX, Re-Enters South Korean Market
  • Acquiring a majority stake in the GOPAX crypto exchange will allow Binance to re-enter the South Korean market, two years after it left.
  • The funds for the acquisition came from Binance’s Industry Recovery Initiative, and will be used to enable customer withdrawals and interest payments on GOPAX.
February 3, 2023, 12:30 PM

Binance CEO Changpeng Zhao. CoinDesk

Search for Do Kwon Continues, Reportedly Hiding in Serbia
  • Seoul’s Southern District Prosecutor’s office has confirmed that Do Kwon had moved to Serbia after his visit to Dubai in October.
  • The Asian country’s Ministry of Finance is reportedly “in the process of requesting cooperation” from the Serbian government in its investigation into Do Kwon.
Hong Kong Changes Stance on Retail Crypto Trading
  • During the opening of Hong Kong’s FinTech Week, the city government revealed it was considering ways to give retail investors a “suitable degree of access” to crypto trading.
  • Hong Kong will also introduce a new licensing regime for virtual asset service providers, and has invited them to set foot in the city for new business opportunities.