South Korea has issued guidelines specifying the categories of digital assets that will be treated as securities in the nation and subject to the country’s securities regulations.

The Financial Services Commission (FSC) noted in a press release that digital assets that meet the criteria set out in the country’s Capital Markets Legislation would be recognized as securities. These qualities can be found in the act itself.

According to the legislation, securities are considered forms of investment in the financial market in which the buyer does not need to make any additional payment after the first investment. In addition, the FSC presented several examples of the type of digital assets that are likely to be classified as securities. According to the Financial Stability Commission (FSC), this can include tokens that offer investors a return, give holders rights to dividends or residual assets, or give holders a stake in the company’s operations.

Under the provisions of the country’s Capital Market Law, virtual currencies that meet the criteria for classification as security tokens will be subject to regulation. Meanwhile, the new rules will control digital assets that do not have the characteristics of securities and will apply to such digital assets.

Token issuers and brokers, such as cryptocurrency exchanges, will be responsible for determining whether cryptocurrencies will be classified as securities under the legislation, as established by the FSC. Additionally, the regulatory body emphasized that a case-by-case analysis will be carried out.

The financial authority also stressed that the new guideline is part of the preparations for the legalization, issuance and distribution of security tokens within the country. This was mentioned in the previous sentence.

The cryptocurrency ecosystem has seen significant participation from South Korea. The city of Busan announced its intentions to create a decentralized digital commodity market on January 19. Government officials have said that this year would mark the start of the platform’s activities.

Added to this, the nation’s Ministry of Justice has plans to implement a cryptocurrency monitoring system. The South Korean government announced on January 29 that it will implement a monitoring system in an attempt to prevent money laundering attempts and recover cash linked to illegal activities.