South Korea has taken an important step towards bringing crypto into the mainstream as the country’s top financial regulator introduces new guidelines on security tokens.
Under the new guidelines, security tokens, defined as financial assets issued by a centralized party and tokenized on a blockchain, will be introduced in a regulated environment with the same rules that apply to the country’s traditional financial market.
The new guidelines were released by South Korea’s Financial Services Commission (FSC) on Monday.
According to FSC, stablecoins will not be defined as security tokens under the new rules. It is also clear that tokens without a centralized issuer, i.e. sufficiently decentralized, will fall outside the scope of the new regulations.
“[…] the digital assets corresponding to the securities must be issued and distributed in accordance with all securities regulations under capital markets law,” FSC said on its website.
In terms of stablecoin regulations, South Korean regulators have previously indicated that they want to work with their international counterparts, saying the policy should be developed “in a manner consistent with foreign regulations.”
Bringing Crypto into the Mainstream
The new plan to better regulate security tokens is seen as part of a larger effort to bring crypto into the mainstream in South Korea, and could also be seen as a de facto legalization of crypto.
The country is in the midst of a deeper push to regulate the crypto industry, and lawmakers in the national parliament are currently considering 17 different crypto-related regulatory frameworks. The goal is for all new rules to be part of a comprehensive legal framework for crypto known as the Digital Asset Basic Act.
Only bitcoin is a commodity in the United States
In the United States, Securities and Exchange Commission (SEC) Chairman Gary Gensler has made it clear that while he views bitcoin (BTC) as a commodity given its level of decentralization, other cryptocurrencies may be considered securities for regulatory purposes.
In the US context, such a distinction is extremely important, given that securities have traditionally been much more comprehensively regulated than commodities.