Samil PwC seminar informs companies about crypto accounting amid shifting Korean regulations

Korean Financial Authorities to Provide Support for Security Token MarketAmid growing calls for accelerating the growth of the emerging security token (ST) market, the South Korean government is preparing to introduce supportive measures. The security token market is powered by blockchain technology which allows fractional investment in real world assets (RWAs) such as real estate and artwork.Security tokens are digital assets that represent securities generated through a process called security token offering (STO). These tokens, backed by RWAs, can be traded similarly to traditional securities. Investors can use these tokens to obtain shares, voting rights, interest, or profits.Photo by Philip Jang on UnsplashSupport measures for security token IndustryNext month, the Financial Services Commission (FSC) will draw up support measures and policy improvement plans to bolster the nascent security token industry. An FSC representative mentioned that the agency intends to work with the National Assembly to finalize the legislation of security token-related bills by November. Furthermore, the government official said the FSC will actively seek input from industry stakeholders to formulate strategies for enhancing policies designed to promote the growth of the security token market.To align with the national objective titled “The Establishment of Digital Asset Infrastructure and Regulatory Framework,” the FSC revealed regulatory guidelines for security token issuance and distribution in February. These new guidelines are centered around the establishment of institutions responsible for account management and entities engaged in over-the-counter (OTC) trading. Subsequently, in July, lawmaker Yun Chang-hyun, a member of the National Assembly’s National Policy Committee, proposed a bill to amend the Electronic Securities Act and the Capital Markets Act with the aim of ensuring that these Acts are consistent with the new regulatory guidelines.Security token market’s growth potentialWith growing anticipation that the security token market could rival the size of the exchange-traded fund (ETF) stock market, securities firms, banks, and blockchain companies have been eager to carve out a niche for themselves since the start of the year. However, their progress has been hindered by a potentially extended period of higher interest rates in the US and the slow advancement of security token-related legislation. While these organizations tried to explore opportunities through the financial regulatory sandbox, their endeavors proved more or less fruitless. An official from a securities firm voiced concerns over the escalating costs of setting up security token infrastructure, especially with legislative delays.On this matter, the Korea Financial Investment Association (KOFIA) has emphasized the urgent need to pass security token legislation to clear up regulatory ambiguities. They’ve also called for measures to stimulate market growth, such as relaxing regulations related to token issuance and distribution and increasing investment caps.At a seminar hosted by the Korea Capital Market Institute, Ahn Hyuk, Head of the Platform Division at Korea Investment and Securities, highlighted that the rigorous review of security registration applications by the Financial Supervisory Service (FSS) might impede the security token market’s growth. Responding to this, Jang Young-shim, Head of the Corporate Disclosure Department at FSS, said that both the FSC and FSS will carefully listen to industry feedback, addressing a range of topics from regulatory relaxation to investor protection.

Web3 Security Startup Blockaid Raises $33M in FundingIsraeli enterprise Blockaid, a Web3 security startup founded by two former Israeli military cyber intelligence personnel, has secured a total of $33 million in funding.The recent Series A round of $27 million was led by Ribbit Capital and Variant and saw participation from Cyberstarts, Sequoia Capital, and Greylock Partners. This funding totals $33 million when consolidated with an initial $6 million seed round.Photo by Shubham’s Web3 on UnsplashSecuring Web3 against threatsBlockaid offers comprehensive Web3 security solutions designed to combat crypto fraud, phishing, and hacks. Its approach involves the examination of both on-chain and off-chain transactions. In this way, the firm is seeking to set itself apart from competitors like CertiK and Cyvers.The company’s decentralized application (dApp) Scanning Engine simulates and validates blockchain transactions before they are executed. This process takes place within Blockaid’s dApp Scanning Sandbox, which also assesses the potential maliciousness of interactions and dApps.Since its inception in September 2022, Blockaid claims to have successfully scanned over 450 million transactions, preventing over 1.3 million attacks and safeguarding more than $7.1 billion in assets. Furthermore, the Israeli startup’s efforts have averted losses of over $500 million in the Web3 ecosystem.Recent success storiesOne notable success story involves the prevention of a phishing attack targeting Ethereum co-founder Vitalik Buterin’s X (formerly Twitter) account. Due to Blockaid’s security measures, users’ wallets remained protected, though unsecured wallets with approximately $700,000 in assets, including valuable NFTs, suffered losses in the attack. Blockaid has been involved in enhancing security for prominent platforms, including MetaMask, OpenSea, Zerion Wallet, and Rainbow Wallet.With the newly acquired funds, Blockaid aims to expand its client base and meet an increasing demand for its security solutions. Ido Ben-Natan, co-founder and CEO of Blockaid, expressed confidence in their ability to support both existing and new customers during these market conditions. Blockaid operates from New York and Tel Aviv and plans to bolster its workforce by hiring additional personnel across various functions.Addressing the Web3 security challengeThe significance of Blockaid’s work becomes even more apparent when considering the current challenges in the Web3 space. In recent years, the Web3 sector has faced a rising tide of fraud, phishing attempts, and hacks. As noted by Ben-Natan, Web3 has experienced staggering losses, with $14 billion stolen in just one year, surpassing losses in all non-crypto cyber-crime combined. Additionally, one in ten decentralized applications (dApps) has been identified as malicious, making even crypto-savvy users susceptible to malicious actors.Furthermore, there is a growing concern about nation-state actors actively targeting and stealing user funds for their economic gain. In this adversarial and uncertain environment, the usability and security of Web3 must be enhanced to unlock its full potential. Blockaid’s innovative security tools aim to provide the necessary protection for Web3 builders and users.There’s no doubt that Web3 has to become more seamless and far more secure if it is to appeal to the mass market. In its blog post announcing the funding round, the project stated:”We believe that users shouldn’t have to know they’re interacting with crypto. We believe that web3 should just work, and work securely.”

Koscom, the technology subsidiary of the nation’s sole securities exchange operator Korea Exchange, has partnered with LG CNS, an information technology service provider, to launch a joint security token platform, according to a Koscom announcement. Task and tech allianceThe collaboration between Koscom and Korean conglomerate LG Group’s affiliate aims to gain a competitive advantage in the increasingly crowded security token market. On Monday, Koscom signed a memorandum of understanding with LG CNS in Seoul to form a task and technology alliance for security token projects.The partnership will combine Koscom’s expertise in building tech-based capital market infrastructure with LG CNS’s blockchain technology to produce fruitful outcomes. The joint project intends to provide distributed ledgers and a joint platform for the issuance and distribution of security tokens. Securities firms operating their own platforms can also choose to use its distributed ledgers. Koscom’s preparationSince last year, Koscom has been conducting research in security token offering and has formed a working group with eight securities firms that have their own security token teams. The working group has been hosting seminars regularly since the second half of last year, and on April 4, Koscom revealed its project plan to 25 other Korean securities firms. LG CNS’s readinessLG CNS has been conducting research and development of security token technologies since last year and has complied with the Korean regulatory framework. The company manages a consortium blockchain network and has completed the development of key technologies for security token services, such as highly secure wallets.Using its corporate blockchain platform Monachain, LG CNS has achieved success in developing multiple projects, such as a pilot for central bank digital currencies involving NH Bank and Woori Bank and a non-fungible token (NFT) trading system for Bithumb Meta, a subsidiary of the major Korean crypto exchange Bithumb.Meanwhile, Koscom will support security token projects of not only securities companies but also fractional investment firms and banks. Currently, Koscom is in talks with relevant entities about building infrastructure.