South Korea Moves To Revolutionize Capital Markets With Security Tokens

Key Points:

• South Korea’s Financial Services Commission aims to institutionalize security tokens through legislative amendments.
• Proposed changes include allowing the issuance and circulation of these tokens and establishing regulations for account management agencies and over-the-counter transactions.
• The move reflects the growing interest in incorporating blockchain-based token securities into the financial investment industry.

According to Korean media hankyung, South Korea’s Financial Services Commission (FSC) is planning to submit amendments to the Electronic Securities Act and the Capital Market Act, aiming to institutionalize security tokens.

The proposed bill will incorporate the rectification plan for security token issuance and circulation that was introduced by the FSC in February. It will establish regulations for the issuance and circulation of security tokens, including the role of account management agencies and over-the-counter transaction intermediaries.

The move to institutionalize token securities is seen as a significant development in the financial investment industry. Security tokens are issued in the form of tokens using blockchain technology and can represent various rights, allowing for the trading of assets such as commercial buildings, artworks, and intellectual property. This opens up new possibilities for innovative businesses in the securities industry.

In preparation for the bill proposal, public hearings were held by the People’s Power Policy Committee, Political Affairs Committee, and Digital Asset Special Committee to discuss the potential impact of token securities on the capital market.

The proposed bill is expected to align with the Token Securities Issuance and Distribution Regulatory System Maintenance Plan announced by the FSC earlier this year, which includes amendments to enable the issuance of token securities and the establishment of new institutions and brokerages related to their issuance and distribution.

The submission of these amendments to the Electronic Securities Act and the Capital Market Act signifies a significant step toward the institutionalization of security tokens in South Korea. If approved, it will provide a regulatory framework that facilitates the issuance, trading, and management of tokenized securities, bringing increased clarity and opportunities to the industry.

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