Today Korea’s Financial Services Commission (FSC) outlined plans for new regulations around ‘token securities’, the wording it uses for security tokens or digital securities based on blockchain. Additionally, numerous industry participants are preparing for tokenization, including Shinhan which announced plans for a new security token alliance.
According to the FSC, existing regulations including the Electronic Securities Act would apply to token securities, but the legislation needs updating to apply them to tokenization expressly. In addition to tokenized stocks and bonds, the rules would also be relevant for tokenized real estate, art and other assets. Meanwhile, cryptocurrencies are separately subject to the Framework Act on Digital Assets, which is currently in the works.
The regulator used the analogy of food, saying the food is the same regardless of the container in which it is served. Likewise, a security could be paper-based, electronic (centralized) or based on distributed ledger technology (DLT).
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