South Korea broadens rules defining which tokens are securities

Quick Take

  • South Korea’s regulator has widened the definition of what type of blockchain-based token is a security.
  • Digital assets that likely meet the definition include those that give a stake in business operations, dividend rights or share of corporate profits.

South Korea's regulator has widened the definition of what type of blockchain-based token is considered a security with implications for issuers and crypto exchanges.

The Financial Services Commission said Monday that tokens with matching characteristics 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.

THE SCOOP

Keep up with the latest news, trends, charts and views on crypto and DeFi with a new biweekly newsletter from The Block's Frank Chaparro

By signing-up you agree to our Terms of Service and Privacy Policy
By signing-up you agree to our Terms of Service and Privacy Policy

South Korea is expected to issue new crypto regulations in the coming months, making it the latest country to move forward with a regulatory regime in response to last year's collapse of big name operators including the country's own Terraform Labs, the company behind the Terra blockchain.

Digital asset service providers, including crypto exchanges, will be responsible for evaluating whether tokens are securities, the FSC said. Firms that don't follow procedures for issuing securities would be violating the law and face sanctions, the statement said.


© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.