A South Korean daily has revealed that the Presidential Transition Committee is considering the issuance of Security Token Offerings (STOs) and Initial Exchange Offerings (IEOs) for the digital space.
STO allows security tokens to signify the ownership and issuer of an asset, including tokenizing traditional assets like property and stocks as collateral. Meanwhile, IEO is when an issuer issues a token through a virtual asset exchange. Therefore, the approval of the plan could mean better oversight of the virtual asset market.
Many countries recognize STOs
As per sources cited by The Financial News, negotiations are ongoing on the proposal as major economies have already implemented similar regulations. As per a research report by Deloitte, “Certain jurisdictions are also implementing legislation to recognize Security Tokens more formally, remove hurdles from the implementation of DLT in the traditional securities sector and implement related protections.” Countries like the US, Singapore, and the UK are examples of this category.
A translated statement by an official to the daily stated, “The transition committee seems to be pursuing the new government’s virtual asset policy by dividing it into securities and non-security types. Security-type virtual assets issue tokens based on traditional assets. ” Further highlighting the reason to revise the Capital Market Act.
He also explained, “In the case of non-security virtual assets, the discussion will proceed in the direction of institutionalizing President-elect Yoon’s promise to allow IEOs and ICOs.”
Promises from the manifesto
We can recall that Conservative People Power Party’s Yoon Suk-yeol had made pro-crypto pledges in his manifestos, just like his Democratic Party counterpart. And since the initiation of elections last year, the 2017 ICO ban reversal has been the regulatory topic of discussion.
The local report highlighted the Financial Services Commission (FSC) remarked on the need to update the existing Capital Market Act for the introduction and activation of STOs. After which, the criteria to offer STOs by a trading platform, including crypto and stock exchanges, will be reviewed.
Along with that, the FSC is also reportedly planning to up the number of virtual asset exchanges. Choi Ji-hyeon, a senior deputy spokesperson for the transition committee, had earlier explained, “The department’s position is that nothing has been confirmed yet. The virtual asset promise is currently under internal discussion and review.”
Breaking the dominance
With that being said, it is worth noting South Korea has only four won-to-crypto exchanges, dominating the domestic crypto market. However now, the Korea Federation of Banks (KFB) is also reportedly asking South Korea’s incoming presidential administration to approve local banks to service cryptocurrencies.
The new proposals are in line with President-elect Yoon Seok-yeol’s vow to deregulate the crypto industry, allowing it to grow. He had said in a virtual forum earlier this year, “To realize the unlimited potential of the virtual asset market, we must overhaul regulations that are far from reality and unreasonable.”
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