South Korean regulators to prepare guidelines for security tokens in 2022

South Korea will have a separate security token market operated by Korea Exchange.

Guidelines for security tokens in South Korea will be announced by the end of 2022. Simultaneously, the pilot market with a regulatory sandbox will be launched before formal institutionalization.

South Korea's chief financial regulator, the Financial Services Commission (FSC), on Tuesday released the report containing the results of a joint policy seminar it held with the Financial Supervisory Service, Korea Exchange, Korea Securities Depository and Capital Market Research Institute. . Stakeholders gathered to discuss the national strategy on the issuance and distribution of security tokens.

Since the current e-securities and capital market system in the country does not include any legal definition of non-standardized securities issued via blockchain, the FSC found it necessary to draft separate guidelines to "support the proper market development and industry."

The FSC will prepare and announce the guidelines for security tokens in the fourth quarter of 2022. After that, it will proceed with the establishment of the "Security Token Discipline System" through revisions to existing legislations , such as the Electronic Securities Law and Capital Market Law.

The digital securities market will be managed by the Korea Exchange, while the Korea Securities Depository will evaluate the tokens before registering and listing them. Initially, the regulator will allow OTC trading on a limited scale.

Related: South Korean financial watchdog wants to 'quickly' review crypto legislation

This announcement marks another step in a series of regulatory initiatives in the country, which the newly elected government has made it its mission to promote the crypto market. On September 1, local lawmakers proposed to enact the Metaverse Industry Promotion Act, which