The South Korean government will permit the issuance of security tokens (STO) and will establish a safe token circulation system. The regulations, which will include the issuance and distribution of STO, will be announced early next month.
Considering the needs of the times for digital transformation, we will allow security token issuance (STO) and create a safe distribution system,” Financial Services Commission Chairman Kim Joo-hyun said at the 6th Financial Regulatory Innovation Conference.
Since it is preparing a new regulatory system, we will make sure that it can be settled smoothly through the stages of presenting guidelines, sandbox testing, and formal institutionalization. He added.
Security Token Offerings (STOs) combine blockchain technology with the requirements of regulated securities markets to support asset liquidity and wider access to finance. STOs are typically the issuance of digital tokens in the manner of regulated securities in a blockchain ecosystem.
While guidelines governing the issuance and distribution of security tokens are expected to be released early next month, South Korea will relax regulations on the country’s financial markets in an effort to attract more foreign investors as it seeks inclusion in the MSCI equity index.
According to Joo-Hyun, foreigners with internationally recognised identification, such as passports or legal entity identifiers, will be permitted to invest in local capital markets.
In addition, the country’s top financial regulator stated that authorities would develop a safe trading system to better protect investors.
Choo Kyung-ho stated earlier this month that beginning next year, the government will make it mandatory for large publicly traded companies to file important regulatory filings in English as part of efforts to make the country’s capital markets more accessible to foreign investors.
South Korea, known for its high internet connectivity, is at the forefront of blockchain and metaverse innovation. In August, the city of Busan announced plans to establish a cryptocurrency exchange in partnership with FTX. However, after FTX’s collapse in November, the city decided to discontinue its collaborations with centralized global exchanges.
According to previous reports, the Financial Services Commission (FSC) and the National Assembly are working to pass legislation that would allow financial authorities to monitor and punish unfair trade practises such as the use of undisclosed information, price manipulation, and fraud while supervising cryptocurrency exchanges.
