South Korea is making a statement as it is making its stance on the cryptocurrency world crystal clear. As of 6 September, the country’s top financial regulator revealed plans to launch a distinct digital securities market. This will be a separate entity from the Korea Composite Stock Price Index (KOSPI).
South Korea is making this move with the view to institutionalize and promote cryptocurrencies in the country. Furthermore, the envisioned digital securities market would accept tokens that use blockchain to represent ownership rights or asset value. However, these tokens must be registered as electronic securities.
The Financial Services Commission (FSC) of South Korea also stepped in. It alerted law enforcement authorities about 16 foreign cryptocurrency exchanges’ violations of the Specific Financial Information Act.
The Korea Exchange (KRX) will run the digital securities market under the direction of the FSC, and security firms will act as brokers for trades.
Furthermore, the listing of security tokens requested by the issuer or through a brokerage is to be examined and registered by the Korea Securities Depository. The total volume of listed tokens will also be managed by the repository.
Tokens will be distributed in the same way as current securities for the protection of investors. Additionally, it will permit a small number of over-the-counter transactions at the beginning of the market.
The administration of President Yoon Suk-yeol declared earlier in 2022 that it will work to legalize security token sales and initial coin offers (ICOs).
Furthermore, as per additional reports, major South Korean securities firms NH, KB, and Shinhan plan to launch digital asset exchanges in the first half of 2023.
South Korea and Crypto
South Korea has one of the most comprehensive legislative frameworks for the Bitcoin [BTC] industry. Many BTC exchanges departed the country in 2021 when the government mandated that enterprises use ISMS certification.
Only five of the 35 virtual asset providers have registered locally. These include UpBit, Coinone, Gopax, Korbit, and Bithumb. The aforementioned crypto exchanges are in charge of more than 99% of the country’s cryptocurrency trades.
However, the recent collapse of the Terra ecosystem increased the country’s attention to the regulation of cryptocurrencies.