On February 6, South Korea’s Monetary Providers Fee (FSC) scrutinized security token regulations and their issuance. In response to regulatory authorities, any digital property that meets the securities characteristics outlined in the Capital Markets Act may become a regulated security within the country.
According to the FSC, cryptocurrencies that offer participation in a company’s business and entitle the owner to dividends, residual assets, or profits of the company fall under the securities class under the Capital Markets Act.
Securities regulations include disclosure requirements and prohibit unfair trading practices to protect the rights of traders. However, the
cryptocurrencies that do not fall under the securities class may be regulated by the upcoming Digital Asset Framework Act, the FSC said. Digital assets without an issuer, such as Bitcoin (BTC) and Ethereum (ETH), are not considered securities, the FSC said.
The FSC may also allow Safety Token Choices (STOs) by changing the Digital Securities Act.
However, the FSC acknowledged that token issuers and brokers, such as cryptocurrency exchanges, may be required to determine which cryptocurrencies are securities on a case-by-case basis. This is similar to how firms must self-determine whether or not to issue securities and follow all applicable rules.
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