An era has opened in which ownership of not only financial assets such as stocks and bonds but also various real assets such as real estate and artworks is traded as tokens based on Blockchain.
The Financial Services Commission said on the 15th that revisions to the Act on Electronic Registration of Stocks and Bonds and the Financial Investment Services and Capital Markets Act to introduce security token offerings (STOs) passed the National Assembly's plenary session. It comes three years after the financial authorities issued guidelines.
Security token offerings (STOs) refer to securities under the Financial Investment Services and Capital Markets Act whose issuance and distribution information is recorded and managed on Blockchain. This means issuing tokens that represent rights to various asset, including real estate and artworks as well as stocks and bonds, and conducting a transaction.
The revisions include the concept of a distributed ledger, a Blockchain technology, and a plan to use a distributed ledger as a securities account book. To issue security token offerings (STOs), one must comply with legal procedures and requirements, give prior notice to an electronic registration agency, and apply for electronic registration.
The plan also includes allowing the distribution of investment contract securities. Investment contract securities are securities in which investors put money into a joint venture and receive profits and losses according to the business results. Currently, investment contract securities related to art exhibition, management and sale businesses and premium Korean beef, known as hanwoo, livestock businesses are being issued.
The legal revisions to institutionalize security token offerings (STOs) are scheduled to take effect in January next year after establishing a distributed-ledger-based securities account management infrastructure and refining detailed systems for investor protection.
The financial authorities plan to form a consultative body of related institutions with participation from the financial investment and Fintech sectors and begin discussions in February this year so the security token offerings (STOs) ecosystem can open as soon as the law takes effect. The consultative body will consist of three divisions: technology and infrastructure, issuance system, and distribution system. The financial authorities said, "Small and midsize enterprises and small business owners are expected to be able to securitize various projects and raise business funds through the capital market."