The South Korean watchdog updated what assets are considered securities and clarified the regulations governing such tokens.
Regulators said the Capital Markets Act would oversee certain types of cryptos as part of a broader effort to standardize the digital asset ecosystem.
Reports say tokens that give dividends or a slice of business profits could fall under the purview of South Korea’s securities laws.
South Korea’s top watchdog updated what assets are considered securities and clarified the regulations governing such tokens, per a Monday press statement from the country’s Financial Services Commission (FSC).
The announcement noted efforts toward expanding securities laws to include certain types of cryptocurrencies and blockchain assets. According to the presser, the country’s Capital Market Act will oversee crypto tokens that share similar traits with traditional securities.
Also, crypto exchanges and other crypto facility providers will be required to assess and determine what tokens qualify as securities. The presser stressed that entities that fail to align with the new regime could face sanctions. Companies that do not comply with the updated rules would be deemed in violation of securities laws, per the FSC.
Industry observers opined insight regarding what tokens could be classified as securities under the broadened policy. Blockchain assets and cryptos currencies that offer dividends or a share of business profits are believed to qualify as securities, per reports.
The move could herald a slew of ramifications for local crypto participants and digital assets service providers (DASPs), incentivizing stakeholders to alter their offerings or rethink business models.
South Korea’s Lawmakers Inch Closer To Crypto Regulations
Indeed, Monday’s news was released months after a raft of regulatory moves from South Korea’s financial agencies and lawmakers aimed at regularizing the crypto industry. These efforts notably picked up following the failures of marquee industry players like Three Arrows Capital and Terra, a blockchain ecosystem founded by the fugitive Do Kwon.
In 2022, lawmakers mulled several policy proposals including taxing token airdrops and cracking down on unregistered blockchain entities. 13 Digital Asset Bills were in review as of August last year and 16 crypto exchanges were named as illegal operators.
The country is also en route to unveiling crypto regulations lawmakers say will protect investors without stifling innovation in the local crypto landscape.