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South Korea Released Fresh Regulatory Guidelines for Crypto Markets

The Financial Services Commission, in a press release on Monday, discussed how digital currencies ought to be handled according to the securities categorization they fall under.

Photo by Daniel Bernard / Unsplash

South Korea has issued guidelines for Security Tokens in Advance of the New Regulation.

South Korea has released (1) new guidelines concerning security tokens as part of its efforts to expand its reach in providing much-needed regulation of the emerging crypto currency ecosystem.

The Financial Services Commission, in a press release on Monday, discussed how digital currencies ought to be handled according to the securities categorization they fall under.

The digitization of securities within the purview of the Capital Markets Act through the utilization of Distributed Ledger Technology is what the regulator alludes to when they use the term "security token."

According to the Capital Markets Act, the regulator stated that securities are regarded as investments when investors are not forced to make an extra top on their first buy-up.

Additionally, the South Korean regulatory body noted that ownership of security tokens gives the impression that the bearer is interested in the company or project. In light of this shareholding, the regulatory body has said that holders of tokens would be entitled to a portion of the company's earnings or profits.

Tokens that satisfy the requirements of this definition will be subject to the guidelines of the Capital Markets Act, according to the Financial Services Commission.

On the other hand, tokens that do not fit this criterion will be governed by the relatively new legislation for digital assets currently being developed. The Financial Services Commission has stated that the process by which it will decide whether or not a token is a security would be conducted on a case-by-case basis.

The regulator stated that the companies responsible for the issuance of the tokens would be the ones to make this judgment. This might be anything from crypto currency trading sites to the parent firm generating the token.

In the case of token securities, the entity that plans to issue, distribute, and manage token securities is the one who is responsible for examining and determining whether or not token securities qualify as securities, as well as for ensuring compliance with applicable securities legislation.

This is the same as assessing if a firm is issuing stocks and satisfying its requirements under the Capital Markets Act, such as disclosure, as stated in the release.  

South Korea's Approach towards Crypto

South Korea's government has a highly positive attitude toward crypto currency as a form of investment. The government is taking a highly aggressive approach to the regulation of the developing business of digital currencies, which is one of the most lively centers for digital currencies in Asia.

The nation has demonstrated good movement, such as drawing corporate partnerships in the growth of the nation's crypto environment, even though its full legislation of digital assets is still being drafted.

The demand in South Korea for crypto taxation legislation is strong enough, but the rule still needs to be appropriately implemented. South Korea is a nation.

Trading platforms that do not have a commercial link with traditional financial institutions were forced out of the nation in 2021 due to the country's zero-tolerance policy regarding crypto-related scams.

A hasty withdrawal from the South Korean market was necessary due to the inability of exchanges like OKEX to match up with expectations.

The nation's government only recently made public its intentions to establish a sophisticated crypto monitoring and surveillance system that would assist in the fight against crypto fraud.