South Korea provides recommendations for security tokens and STOs

Certain digital assets will be regulated as securities under the Capital Markets Act, and STOs will be permitted under the Electronic Securities Act.

The Financial Services Commission (FSC) of South Korea provided advice on the regulation and issuing of security tokens on February 6. According to the regulator, digital assets that conform to the Capital Markets Act’s definition of securities would be regulated as securities in the nation.

According to the FSC, cryptocurrencies that provide a share in company operations and give holders the right to dividends, residual assets, or corporate earnings would come within the Capital Markets Act’s securities classification.

To preserve investor interests, the securities rules mandate public disclosure and ban unfair trading practices.

The FSC said that cryptocurrencies that do not qualify as securities would be governed under the forthcoming Framework Act on Digital Assets. The FSC said that digital assets without an issuer, such as Bitcoin (BTC) and Ethereum (ETH), would not be considered securities.

In addition, the FSC will legalize Security Token Offerings (STOs) by amending its Electronic Securities Act. Token issuers and brokers, such as crypto exchanges, will be forced to examine whether cryptocurrencies are securities on a case-by-case basis, according to the FSC. Similarly, corporations must independently decide if they are issuing securities and comply with any requirements.

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