FSC approves security token transactions in Korea

The Korea Times

The Korea Times

Finance

Sun, October 1, 2023 | 17:17

Markets

FSC approves security token transactions in Korea

Posted : 2023-02-05 16:34

Updated : 2023-02-06 15:53

Korea's Yeouido financial district in Seoul / Yonhap

By Lee Min-hyung

Korea's Financial Services Commission (FSC) on Sunday approved the issuance and distribution of security tokens ― a kind of cryptocurrency used to trade fractions of assets, such as real estate and art, in the digital form.

Under the decision, investors will be able to trade security tokens sometime as early as 2024 after the FSC finishes the revision of relevant laws.

"We have decided to allow the new form of digitized securities to be issued here," said Lee Su-young of FSC's capital market division. "This will enable investors to make fractional investments with more ease via the security token. We will also protect security token investors on par with those investing in conventional securities."

The financial watchdog decided to grant approvals for the trading of blockchain-powered digital tokens to reflect the global investment paradigm shift. The authority will submit specific revisions to electronic securities and capital market acts to the National Assembly by the end of the first half of 2023 for the full-fledged institutionalization of security tokens here.

Investors can trade security tokens by using mobile trading systems from major securities firms here. Big brokerage houses ― such as KB Securities, Shinhan Securities and Kiwoom Securities ― are busy updating their mobile platforms for the safe trade of security tokens.

"Brokerage houses will be able to diversify their revenue streams in their retail business, as they can raise more capital from retail investors in the security token market," Kim Se-hee, an analyst at Eugene Investment & Securities, said.

But it still remains to be seen whether the market for security tokens will be able to draw popularity from investors here.

"Given that retail investors have rapidly lost interest in the once-popular non-fungible tokens (NFT), we need to think twice before making such fractional investments using security tokens," a source from the industry said. "But it is a good sign that the FSC is showing signs of easing regulations on some trendy investment areas."

mhlee@koreatimes.co.kr