South Korean regulators to set guidelines for security tokens in 2022

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Guidelines for security tokens in South Korea will be announced at the end of 2022. At the same time, the regulatory sandbox pilot market will be launched before formal institutionalization.

South Korea’s financial regulator, the Financial Services Commission (FSC), released the report detailing the results of a joint policy seminar it held with the Financial Supervisory Service, Korea Exchange, Korea Securities Depository and Capital Market Research Institute on Sept. 6. . The stakeholders met to discuss the further national strategy for the issuance and distribution of security tokens.

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Since the current capital market and electronic securities system in the country do not contain legal definitions of non-standardized securities issued via blockchain, the FSC deemed it necessary to establish separate guidelines to “support the healthy development of the market and industry”.

The FSC will prepare and publish the security token guidelines in Q4 2022. After that, it will continue to establish the “Security Token Discipline System” through revisions to existing legislation, such as the Electronic Securities Act and Capital Market Act.

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The digital securities market will be managed by the Korea Exchange, while the Korea Securities Depository will review the tokens before they are registered and listed. In the first phase, the regulator will allow over-the-counter trading on a limited scale.

Related: South Korea’s financial watchdog wants to revise crypto legislation ‘quickly’

The announcement is another step in a series of regulatory initiatives in the country whose newly elected government has set the mission of promoting the crypto market. On September 1, local lawmakers proposed to enact the Metaverse Industry Promotion Act, which would promote Metaverse development in South Korea. An ambitious plan to build a comprehensive common crypto framework by 2024 was leaked to the press in May.

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