Korea Financial Services Commission (FSC) issued According to the regulator, any digital asset that meets the characteristics of a security as defined by capital market law will be regulated as a national security.
According to the FSC, cryptocurrencies that fund business operations and entitle holders to dividends, residual assets, or business profits fall under the category of securities under the Capital Markets Act.
Securities regulation imposes disclosure requirements and prohibits unfair trading practices to protect the rights of investors.
However, cryptocurrencies that do not fall under the securities category will be regulated by the upcoming Digital Assets Framework Law, the FSC said. Issuerless digital assets like Bitcoin (BTC) and Ethereum (ETH) are not considered securities, the FSC said.
The FSC will also allow Security Token Offerings (STOs) by amending the Electronic Securities Act.
However, the FSC said token issuers and brokers, such as cryptocurrency exchanges, should evaluate which cryptocurrencies are securities on a case-by-case basis. This is analogous to a company having to make its own decisions on whether to issue securities and comply with applicable regulations.
STOs first appeared on CryptoSlate after South Korea issued guidance on security tokens.
