. The Republic of Korea published guidelines on Monday to define which specific cryptocurrencies would fall under the “financial securities” umbrella. South Korea is currently working on comprehensive regulation for cryptocurrencies known as the “Capital Markets Act”.
The Capital Markets Act defines “securities” as financial investments for which investors do not have an obligation to make additional payments on top of the original investment. The FSC said digital assets that are most likely to be classified as securities include the ones that provide a stake in the operation of a business, rights to a property, or if the issuer generates profits from the business to the investors.
Any cryptocurrencies that fall under this classification will be regulated under the Capital Markets Law. Cryptocurrencies that do not fall under the umbrella of the Capital Markets Law will be regulated by new legislation that is currently being prepared.
The FSC says that the new guidelines currently being prepared will have its first proposal submitted within the first half of 2023.
Shinhan Securities, the largest securities company in South Korea by net profit, announced that it has formed the “STO Alliance” to expand the securities tokens ecosystem.
Cryptocurrency, in terms of regulation, is still in the “wild west” stage. While some countries have taken fast action to cut out the bad actors and help real innovation thrive, others like the United States have not been so quick and have been conducting regulation by enforcement in the meantime. Regulation by enforcement does not assist in real regulation, this only achieves fast settlements from small companies and then regulates on a case-by-case basis.
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