South Korea Recognize Tokens As Securities
The South Korean regulator has broadened the definition of what type of blockchain-based token is considered a security, which has implications for issuers and cryptocurrency exchanges.
According to the Financial Services Commission, tokens with characteristics similar to securities as defined by South Korea’s Capital Markets Act will be regulated as such.
Digital assets that likely meet the definition of a security include those that give a stake in business operations, dividend rights or share of corporate profits, Forkast reported, citing the Korean language statement.
South Korea is expected to issue new crypto regulations in the coming months, making it the latest country to implement a regulatory framework in response to the collapse of major operators last year, including the country’s own Terraform Labs, the company behind the Terra blockchain.
The FSC stated that digital asset service providers, including crypto exchanges, will be responsible for determining whether tokens are securities. Firms that do not follow procedures for issuing securities would be breaking the law and would face penalties, according to the statement.
(With inputs from Shikha Singh)
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