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Cryptocurrency, Featured, News

South Korea is Soon to Regulate Security Tokens

The policymakers in South Korea are getting ready to make the security tokens under the country’s purview with the rules of capital markets in an endeavor to standardize the products.

Last week, the top economic regulators of South Korea encompassing the Financial Services Commission, and the Financial Supervisory Service conducted a meeting with the representatives of the industry at a seminar to review a strategy on how to put forward the new protocols after they declared that the financial regulators strive to bring security tokens under the country’s capital market regulations. 

Also Read: Crypto Police: Australia’s Counterattack To Crypto Criminals

What are Security Tokens? How Will it Help South Korea?

The FSC plans to disseminate guidelines for the security token issuance, and commercialization by the end of the fourth quarter. The blockchain-based digital forms with conventional securities form the security tokens. After successfully circulating the guidelines, the Financial supervisory service plans to transform South Korea’s prevailing capital market regulations, and electronic securities to incorporate security tokens. 

According to the overview of the symposium,  the electronic securities systems and capital markets in South Korea do not endorse blockchain technology. The overview added that it is crucial to integrate the allotment and diffusion of security tokens into the regulatory frameworks to ensure the financial stability of the investors is preserved.  

The FSC has perpetrated itself to bring out new regulations for the cryptocurrency sector of the country, and the councils are planning to scrutinize anti-money-laundering operations in South Korea. 

Also Read: FBI Secures Information to Track Ransomware Attackers

Can Crypto Become a “Threat” to the Financial Stability?

While the Financial Supervisory Service focuses itself to publish guidelines for issuing security tokens, a new article by the Korea Institute of Finance (KIF) demonstrates that the increasing adoption of cryptocurrencies in South Korea might become a threat to the stability of the traditional economic system. A senior investigator at KIF implied that the increasing number of businesses that are investing in the extremely volatile market of crypto currency may encounter profit or loss which might lead to a “breakdown of the quality of the asset” and a threat to damage the prestige of the brand. 

In Conclusion

Although the outcome of the cryptocurrency in the country is still comparatively low, the researcher adds significant growth in the industry since 2019. According to reporters, the “prominence of the digital assets is anticipated to expand“.

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