Korea Exchange will run a separate security tokens market in South Korea.
By the end of 2022, South Korea will unveil its security token regulations. Prior to the official institutionalization, a pilot market with a regulatory sandbox will be implemented concurrently.
The Financial Services Commission (FSC), the principal financial watchdog in South Korea, released the report containing the findings of a joint policy seminar it held on Tuesday with the Financial Supervisory Service, Korea Exchange, Korea Securities Depository, and Capital Market Research Institute. The participants convened to talk about the distribution and issue of security tokens on a national level.
The FSC determined that it was necessary to create separate guidelines in order to “support the sound development of the market and industry” because the nation’s current capital market and electronic securities system does not contain any legal definitions of non-standardized securities issued via blockchain.
The FSC will draft and release the security token guidelines in the fourth quarter of 2022. After that, it will move forward with amending current laws including the Electronic Securities Act and Capital Market Act in order to construct the “Security Token Discipline System.”
The Korea Exchange will run the market for digital securities, and the Korea Securities Depository will evaluate the tokens prior to their registration and listing. The regulator will initially permit small-scale over-the-counter trading.
The statement is the latest in a line of regulatory actions in the nation, whose recently elected administration has made it a priority to advance the cryptocurrency sector. The Metaverse Industry Promotion Act, which would support the growth of the Metaverse in South Korea, was suggested for adoption by local politicians on September 1. By 2024, a comprehensive global crypto framework was to be established, according to an ambitious plan that was disclosed to the media in May.
