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Security tokens, which are securities based on blockchain technology, will be fully permitted in Korea. As the first step in institutionalizing the virtual asset market, fractional investment in real estate and art will become available.
At the 6th Financial Regulatory Innovation Meeting held this morning on the 19th, the Chairman of the Financial Services Commission (“FSC”) passed regulatory reform agendas in the capital market sector, such as a “regulatory system for issuing and distributing security tokens ” and “measures to improve foreign investors’ access to the capital market.”
According to the security tokens issuance and distribution regulatory system announced at the meeting, the property rights of security token investors will be legally protected by allowing digitizing securities with blockchain technology.
Security tokens are financial assets digitized using blockchain technology. As the industry sees the tokens as a subset of virtual assets, the passing of the regulatory reform agenda would mean that some of the virtual assets are allowed in Korea.
In addition, the authorities will allow security tokens to be issued without going through a securities company if certain conditions are met. A distribution platform for security token transactions in the curb market will also be institutionalized to further protect investors.
Once the issuance and distribution of security tokens are permitted, fractional investment in real estate and artworks will become available. As such investments will be based on real-life objects, they are more stable and safer compared to investments in coins. Although some small investment companies are currently operating relevant businesses temporally through regulatory sandboxes, the announced plan aims for legal institutionalization.
The agenda discussed at the meeting will be announced sequentially, actively reflecting the opinions raised at the meeting. In particular, the regulatory system for the issuance and distribution of security tokens is expected to be announced in early February.
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