Legal
On June 2, the Financial Supervisory Service convened a secret meeting with the Digital Asset eXchange Alliance (DAXA) and the five crypto exchanges to discuss details for establishing the securities ability of particular virtual assets.
Working-level and legal representatives for each exchange, as well as 2-3 in-house attorneys, attend the FSS, the Corporate Disclosure Bureau, and the virtual asset exchange. The Financial Supervisory Service intends to provide cautionary notes when examining virtual asset securities and to give instances of virtual asset exchanges that have evaluated securities on their own, such as Upbit and Korbit.
The Financial Supervisory Service intends to evaluate and debate the standards for attributing securities to profit and loss at the meeting. To be regarded as securities, virtual assets must go beyond reasonable expectations of investor gains and contractual rights to collect profits and losses as a consequence of joint enterprise.
In February of this year, the FSS established a specific task force (TF) organization to assess the security of virtual assets. Originally, it was policy to refer to instances from other countries, such as the US Securities and Exchange Commission (SEC), but it seems that local financial authorities are catching up on their own since they are behind in covering the securities of individual virtual assets in the US.
At an April 18 hearing, SEC Chairman Gary Gensler refused to address questions regarding whether Ethereum and Ripple are securities. The SEC-Ripple litigation, which will be a key starting point for the securities judgment, is still pending.
It was earlier announced in March that South Korea’s STO-related law modifications would be presented in the first half of this year and would be implemented by the end of 2024 at the earliest. If a digital asset presently traded on a virtual asset exchange is discovered to be a security, the issuer will be sanctioned for breaching the Capital Markets Act. Authorities said that Terra and Luna are investment contract securities and charged associated individuals with breaking the Capital Markets Act.
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