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.
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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.
- One of the largest South Korean commercial banks, KEB Hana Bank, partnered with crypto custodian BitGo in order to set up a new crypto custody venture in the country.
- The new venture, which will use BitGo’s crypto security expertise and Hana’s experience in financial services and compliance, is expected to launch in the second half of 2024.
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- The now arrested Terraform Labs CEO had reportedly converted the majority of his illicit funds into BTC using foreign exchanged not under the jurisdiction of South Korea.
- While none of the assets tied to Do Kwon were recoverable, South Korean authorities continue to seize assets and properties tied to other executives of Terra.
- A person suspected to be Terra founder Do Kwon was arrested at the airport in Montenegro’s capital city of Podgorica with “falsified documents”.
- South Korean authorities have confirmed the individual was Do Kwon based on “photo data”, name, age, and nationality, but are still waiting for fingerprint information.