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Growing Concerns about Single Crypto Exchange Listings in KoreaAccording to Yonhap Infomax, there is increasing concern about single crypto exchange listings in the Korean market, following the recent arrest of two former Coinone employees.©Pexels/RODNAE ProductionsCrypto listing briberyThe individuals were detained by the Seoul prosecution for allegedly accepting about 3 billion KRW (equivalent to over $2.2 million) in bribes to list a certain cryptocurrency on the exchange.Prosecutors are investigating if these suspects were also involved in the listing of the Puriever token, which is reportedly connected to the kidnapping and murder of a woman in her forties in Gangnam, Seoul.Single exchange-listed cryptosA recent report by the Financial Services Commission (FSC) revealed that 389 cryptocurrencies were listed on a single Korean exchange in the second half of last year, a decrease from the previous year’s 403. Despite the decrease, the trend of single exchange listings continued. Exchanges often exclusively list specific cryptocurrencies to gain a competitive edge, as investors typically prefer larger exchanges with greater liquidity.However, these cryptocurrencies may lack proper review and management and are often highly volatile. The FSC report showed that 34% of cryptocurrencies listed on a single exchange had a market cap of less than 100 million KRW (~$76,000). The Financial Intelligence Unit also warned investors about price fluctuations and liquidity shortages.High volatile cryptocurrencies are attractive to exchanges, as they can lead to increased transaction fee profits.Transparent listingTo address this issue, experts advocate for a transparent listing process.One lawyer in the crypto industry noted that there is a global trend of regulating cryptocurrencies as securities, and if relevant bills pass in Korea, their issuance and disclosure will be regulated. Clear guidelines on disclosures could resolve the issues of single crypto exchange listings, the legal advisor added.Another industry insider has called for investor caution, stressing the need to consider the potential delisting of these crypto assets.

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.

Lee Bok-hyun, the governor of South Korea’s Financial Supervisory Service (FSS), is set to have a meeting with Gary Gensler, the chair of the U.S. Securities and Exchange Commission (SEC), in May. The purpose of their meeting is to discuss whether to classify non-fungible tokens (NFTs) as virtual assets. Currently, NFTs are not seen as virtual assets in Korea, but there is a high likelihood of them being acknowledged as such following the meeting in May, local financial media outlet Edaily reported.Photo by Andrey Metelev on UnsplashLack of definition for NFTsAn NFT is a digital certificate of authenticity that is not fungible or replicable. NFTs tokenize content or assets of various types – from images, music, videos, games and artworks to real-estates – by assigning a unique token ID to them. Many see 2018 as the year NFT technology was first introduced.  Despite its wide range of applications, no legal definition has been made for NFTs. Some view NFTs as technology, and others as virtual assets or securities. The Korean government decided not to recognize NFTs as virtual assets under the Virtual Asset Protection Act (Virtual Asset Act), effective in July. Behind this decision is a perception that NFTs are less likely to pose significant risks to the market, as a large portion of NFTs are now traded by collectors seeking to expand their private collections.  However, NFTs are increasingly seen as speculative destinations by many investors over time, as prices of virtual assets including BTC surge. This shift backs the local movement to recognize NFTs as well as spot bitcoin ETFs as virtual assets. Opposition from NFT businessesBlockchain industry insiders say defining NFTs is of utmost importance, noting that classifying NFTs as virtual assets headfirst could deal a heavy blow to businesses in this sector. One finance insider mentioned that defining NFTs comes down to understanding their purposes and how they are utilized. If NFTs are primarily used for speculative purposes or as currency, they could be recognized as virtual assets, the person said.  The biggest resistance is coming from NFT-related businesses. That is because recognizing NFTs as virtual assets would require these businesses to obtain a virtual asset service provider (VASP) license from the financial authority, which takes significant costs and workforce in the process. A CEO of a blockchain startup, who preferred to remain anonymous, expressed concerns about the possibility of NFTs becoming virtual assets, saying that such recognition would enable NFT transaction tracing, potentially leading to severe violations of human rights. While many industry insiders expect that the financial authorities will bring NFTs under the forthcoming Virtual Asset Act, the FSS stated that no decisions have been made regarding details of the upcoming meeting with the U.S. SEC.