Korea Plans to Implement Token Securities System by 2024

03/06/2023 02:07 • Blockchain Briefs • 89 views

On March 6, Lee, head of the Capital Market Department of the Korea Financial Commission (KFC), announced that amendments to the Electronic Securities Law and the Capital Market Law would be submitted in the first half of this year to lay the foundation for the issuance and distribution of token securities (ST0) in the first half of this year. Lee predicted that according to the legislative discussion of the National Assembly, the Token Securities (ST0) system could be implemented as early as the end of 2024. It is reported that the amendments to the Electronic Securities Law include the recognition of distributed ledger technology as one of the ways to digitize securities and the establishment of a new issuer account management institution. The amendments to the Capital Market Law include the establishment of over-the-counter brokerage business and the issuance of non-typical securities, such as investment contract securities and non-monetary trust beneficiary certificates.

The amendments to the relevant laws of ST0 in South Korea will be submitted in the first half of this year, and will be implemented at the earliest by the end of 2024

Analysis based on this information:

The Korea Financial Commission (KFC) has announced its plan to submit amendments to the Electronic Securities Law and the Capital Market Law in the first half of this year. The amendments aim to lay the foundation for the issuance and distribution of token securities (ST0) by the end of 2024. According to Lee, the head of the Capital Market Department of KFC, the legislative discussion of the National Assembly is predicted to be complete by the end of this year, which would allow for the implementation of the Token Securities system.

The proposed amendments to the Electronic Securities Law primarily focus on digitalizing securities, which includes recognizing distributed ledger technology as one of the potential methods. Furthermore, a new issuer account management institution will have to be established to ensure smooth management and issuance of token securities. As for the amendments to the Capital Market Law, they cover two significant aspects, namely the establishment of over-the-counter brokerage business and the issuance of non-typical securities. This will enable companies to explore new instruments for investment, such as investment contract securities and non-monetary trust beneficiary certificates.

Token securities or ST0 are blockchain-based digital assets representing traditional securities like equity or debt. These assets are designed to have the benefits of blockchain technology, namely decentralization, security, and transparency, while also maintaining the regulatory framework of traditional securities. It is anticipated that token securities will revolutionize the securities industry by reducing costs associated with issuance and trading, eliminating intermediaries, and making securities accessible to more investors.

Korea’s plan to implement a Token Securities System reflects its commitment to developing and integrating blockchain technology in areas beyond cryptocurrency. The country has already made significant strides in the blockchain domain, with the government investing $3.2 billion in the technology by 2022. The proposed amendments to the Electronic Securities Law and the Capital Market Law will surely introduce some challenges, particularly on the regulatory front. Still, the government’s active collaboration with the industry and the National Assembly reflects a positive environment for innovation and development.

In summary, Korea’s plan to implement Token Securities (ST0) by 2024 is a significant step towards the digitalization of securities. The proposed amendments to the Electronic Securities Law and the Capital Market Law lay the foundation for a digital, efficient, and transparent securities marketplace. Despite some regulatory challenges, the government’s commitment towards innovation and collaboration with industry participants bodes well for the success of the Token Securities system.

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