On the 4th, the Financial Services Commission said it held a kick-off meeting of the "security token offerings (STOs) consultative body," made up of the government, related institutions, and private-sector experts.
At the meeting held this morning were Chairperson Lee Eog-weon of the Financial Services Commission; Vice Governor Hwang Seon-o of the Financial Supervisory Service; President Lee Sun-ho of the Korea Securities Depository; and experts from academia, research, and the legal community.
The law to institutionalize security token offerings (STOs), which passed the National Assembly's plenary session on Jan. 1, is slated to take effect on Feb. 4 next year after revising subordinate regulations and building infrastructure. The STOs consultative body will have the government, related institutions, and private-sector experts participate to share expertise and on-the-ground views, and will play a central role in designing the system.
Within the first half of this year, the consultative body plans to form four working groups—technology and infrastructure, issuance, distribution, and settlement—to design digital finance standards and detailed systems.
Chairperson Lee Eog-weon presented three policy directions for institutionalizing security token offerings (STOs), saying, "Given the development trend of Blockchain technology, STOs are expected to become a pillar that supports the structural convergence of the capital market, not a temporary fad."
The first is to build a digital innovation finance ecosystem with diversity and scalability. STOs are expected to efficiently implement various nonstandard rights of new securities and customized infrastructure by leveraging Blockchain-based smart contracts. Lee said, "We will revamp the entire system—issuance, distribution, and disclosure—so that diverse and innovative STOs can emerge."
The second is to establish a tailored investor protection framework that reflects the technical characteristics of Blockchain. Financial authorities will closely review whether current investor protection measures align with STOs and will enhance them to upgrade the investor protection system to fit the characteristics of STOs.
The last is to prepare in advance a securities settlement system for on-chain payment. In some overseas countries, attempts are underway to support 24-hour, T+0 settlement through systems that settle STOs with stablecoins. This has the advantage of maximizing settlement efficiency through on-chain payment, in which securities and the means of payment are paid and settled on the same Blockchain.
Lee said, "We will design the STOs system and infrastructure in consideration of connectivity with stablecoins to be introduced after National Assembly deliberations on the digital asset law and their future scalability."