The Korea Financial Services Commission offers security tokens

After hinting at sharing guidelines in September 2022, the Korea Financial Services Commission (FSC) announced the issuance of a security token offering. This comes after seeing a surge in demand for tokenized digital assets. In addition, the Foundation will establish a systematic structure for the distribution, administration and management of Security Token Offerings (STOs).

Brokerage firms to enter the security token offering market

With the Korean government’s offer, entities in the brokerage market can also transact in the STO market. This will inject more money into the STO market and help offset the growing demand in Korea and abroad.

A security token is a digital asset that represents stocks, bonds, and real estate embedded in cryptocurrencies supported by a blockchain. This step will undoubtedly allow the Korean economy to build a bridge between digital and traditional assets.

An asset with high revenue generation potential

Blockchain technology is on the rise, and there are many examples to define its reach. This technology has multiple applications, from digital currencies to blockchain-based network security. Among other applications, the issuance, administration and management of digital currencies is prominent.

Compared to other types of assets, digital tokens in the form of tokenized securities are a relatively new concept. Hence, the inherent desire to invest, to “experiment” or “take a calculated risk” by investing in them seems like a logical move for brokerage firms.

Perhaps this is part of the motivation of the South Korean government to bet on STO. These digital assets can support potentially large investments. Moreover, at the time of announcing the STO bids, the FSC Chairman said;

STOs were not allowed under the legal system but keeping in mind the digital transformation and the demand at the time. We will allow the issuance of security tokens and build a secure distribution system.

In the wake of Policy seminar Held on September 6, 2022, the Financial Services Commission reported that it would create a pilot market with the help of the Financial Regulatory Protection Fund. The authorities will first review the results before they are released.

Now that official security token offerings are available, it is safe to assume that the Korean government has conducted the required system of checks and balances. The Korean government wants to become a leader in this digital revolution. The FSC Chairman shares how the financial body will gradually institutionalize these digital platforms so that tokenized securities can be traded safely.