Crypto Firms Can Self-Regulate in South Korea
by Tom Nyarunda
South Korea’s Financial Services Commission (FSC) has published a new set of guidelines requiring security firms and crypto industry players to self-regulate. Per the new guidelines published Monday, February 13, 2022, the FSC seeks to bring the country's position on security tokens in line with other Asian nations.
Freedom to self-regulate could boost asset innovation
According to Angela Ang, a former regulator at the Monetary Authority of Singapore and now a senior policy adviser at TRM Labs, a blockchain intelligence firm, South Korea was trying to align its definition of securities with countries like Hong Kong and Singapore. Coming at a time when traditional securities firms had allegedly developed cold feet about entering the market, Ang opines that the freedom to self-regulate could boost asset innovation in the country’s capital markets.
Mooni Kim, an attorney working with local law firm Kim & Chang, commented that the fundamental standpoint of the new security law on tokens resembled the US version, but what remained now was how it would be applied.
Even before the ink dries, the announcement by FSC seems to have elicited mixed reactions in the country's crypto space.
Industry players like Shinhan Investment and Securities have sounded a clarion call inviting interested parties to set up industry standards and educate investors on the potential benefits of token securities.
Debating 17 crypto-related laws
However, on the flip side, a crypto exchange executive who spoke on condition of anonymity because of his relationship with regulators expressed doubts about how the new development would boost the crypto industry. According to the official, it would have been prudent for FSC to begin by clearly defining the types of assets that qualify to be called securities instead before asking firms to self-regulate.
South Korea is an integral player in the cryptocurrency industry, and the country’s national assembly is debating at least 17 crypto-related laws. The proposed laws range from guidelines on implementing reserve requirements at crypto exchanges to fair trade practices to create safeguards to protect local crypto investors.
Regulators worldwide are burning the midnight oil to put in place frameworks to protect thirsty crypto investors, especially following a string of bankrupted crypto exchanges. The debate will culminate in a comprehensive legal framework called the Digital Asset Basic Act (DABA) that aims to introduce regulatory guidelines for the budding crypto industry. However, there is little chance that a piecemeal country-by-country approach will become effective without global coordination.
Tom is a freelance writer with over 15-years’ experience in content creation, blog writing, and SEO specializing in the blockchain and cryptocurrency niche. He is a philosophical figurehead who believes that to make our world a better place, we must invest in incorruptible products and procedures, of which Bitcoin and other cryptocurrencies are leading examples.