South Korea Issues Guidelines for Regulating Security Tokens as Legislation Looms

Security tokens refer to the digitalization of securities under the Capital Markets Act using distributed ledger technology, according to the guidance, and will apply only to digital assets that qualify. The guidance clarifies that stablecoins, which are crypto pegged to the value of other currencies such as the U.S. dollar and are used for payments or as a medium of exchange, will likely not fall under the definition of securities. Digital assets that have no issuer and do not have to “fulfill the obligations commensurate with the investor’s rights,” will also likely fall outside of the scope of security tokens.