South Korea Paves the Way for Regulated Digital Securities
In early 2024, South Korea’s National Assembly passed sweeping amendments to the Capital Markets Act and the Electronic Securities Act, establishing a comprehensive legal framework for tokenized securities. This landmark decision reflects a mature response to evolving financial technologies and positions the country as a leader in digital asset regulation.
Embracing Blockchain for Financial Modernization
The revised laws formally recognize distributed ledger technology, enabling qualified entities to issue and manage digital securities electronically. This shift eliminates reliance on paper-based systems, streamlining issuance and reducing administrative burdens across the financial ecosystem.
A Holistic Regulatory Approach
By introducing the role of 'issuance account management institutions,' the legislation ensures end-to-end oversight of digital securities. It also expands the definition of securities to include investment contract-type instruments, closing previous regulatory gaps and enhancing investor protection.
Unlocking Liquidity Through OTC Markets
- New brokerage licenses will support over-the-counter trading of non-listed digital securities
- Phased implementation allows market participants time to adapt
- Investment solicitation rules take effect six months after promulgation
- OTC trading provisions come online after a one-year transition
These reforms signal South Korea’s commitment to fostering innovation within a secure legal environment, setting a benchmark for digital finance evolution in the region.