South Korea passed two special bills on Security Token Offerings (STO), establishing a legal framework for compliant issuance and trading of digital securities
On January 15, after approximately three years of legislative preparation, the South Korean National Assembly formally passed two key amendments: the amended Securities and Capital Markets Act and the Electronic Securities Act. This move marks South Korea's establishment of clear compliance guidelines and regulatory basis for Security Token Offerings (STO).
Rep. Kim Sang-hoon from the People Power Party explained that the core contents of these amendments include allowing token securities to circulate in over-the-counter markets and restructuring the issuance and circulation system for token securities.
Voting results showed that the amendment to the Securities and Capital Markets Act passed with 210 votes in favor and 1 abstention; the amendment to the Electronic Securities Act passed with 212 votes in favor and 2 abstentions. Currently, both bills only require review by the State Council and promulgation procedures before they can take effect officially.
This legislative process can be traced back to February 2023, when the Financial Services Commission first announced STO guidelines. After being stalled in the previous National Assembly, the bills were revived and ultimately approved in the current legislative session.
The core content of the bill is to introduce the legal concept of "distributed ledger," allowing eligible issuers to directly issue token securities and manage them electronically through registration, recording, and other digital methods;
Meanwhile, the bill also allows the distribution of token securities in over-the-counter markets and formally includes non-traditional securities such as investment contracts within the regulatory scope of the Securities and Capital Markets Act.
In terms of implementation timing, both bills adopt a phased approach. Most provisions of the Securities and Capital Markets Act will take effect immediately upon publication;
However, guidance related to investment advice will take effect after six months, and provisions regarding over-the-counter trading will require one year to take effect; the amendments to the Electronic Securities Act will only come into effect one year after promulgation.
Overall, the core significance of these two bills lies in bringing blockchain finance from the "gray zone" into a legal and regulated framework, aiming to establish clear rule boundaries for financial innovation and promote industry development within a secure framework.
