Korea’s Financial Services Commission (FSC) announced plans to issue security token guidelines in the fourth quarter. Initially, blockchain-based digital securities will have to comply with the same regulations as conventional securities. However, there are plans for pilots in a sandbox to determine any regulatory changes needed to the Capital Market Act.
Security tokens will be traded via the Korea Exchange (KRX) with transactions via brokers. Over-the-counter trading will be allowed but subject to transaction size limits.
Likewise, issuance has to be via a regulated institution, whether that’s a securities firm or bank. All security tokens need to be registered with the Korea Securities Depository, which will also be used for settlement.
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