KBIPA Submits FSC Comments on Token Securities Rules, Urges Broader Industry Participation
Summary
- The Korea Blockchain Industry Promotion Association said it had submitted comments on the Financial Services Commission’s proposed lower-level rules for token securities, centered on broader industry participation, stronger investor protection, and secondary market expansion.
- The association said a legal basis is needed so that technology companies, fractional investment operators and the Bank of Korea can participate in distributed ledger validation and in building a delivery-versus-payment (DvP) system if they meet the required conditions.
- It also called for advance notice and grace periods when distributed ledger operating rules are changed, a legal basis for transfers to other qualified distributed ledgers, and disclosure of whether authorities will create an authorization framework for multilateral over-the-counter trading in investment contract securities and when that review will take place.
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The Korea Blockchain Industry Promotion Association, or KBIPA, said on Nov. 3 that it had submitted comments to the Financial Services Commission on proposed amendments to lower-level regulations for token securities that were put up for legislative notice on Oct. 2.
The association's proposed revisions focus on broader industry participation, stronger investor protection and expansion of the secondary market.
Specifically, KBIPA said the rules should provide a legal basis for not only securities firms and other existing financial institutions, but also technology companies and fractional investment operators, to participate in distributed ledger validation if they meet certain requirements.
It also proposed allowing settlement-related institutions such as the Bank of Korea to participate in distributed ledgers, laying the groundwork for a delivery-versus-payment, or DvP, system under which securities and cash are transferred simultaneously.
The group also called for stronger investor protections. It said changes to distributed ledger operating rules should be announced in advance and go through a public comment process. Revised requirements should, in principle, take effect only after a six-month grace period. It also said a legal basis should be established to allow token securities to be transferred to another qualified distributed ledger if an existing ledger can no longer be used.
KBIPA also raised the need to expand the secondary market. It said investment contract securities are included among assets eligible for electronic registration on distributed ledgers, but are excluded from authorization for multilateral over-the-counter trading. It asked authorities to disclose whether they plan to establish such an authorization framework and the timeline for reviewing it.
"For the token securities system to take root in a stable manner, it is necessary to clarify participation requirements and responsibilities while preserving room for technology choice and considering both protection of investor rights and continuity in issuance and distribution," KBIPA said.
Uk Jin
wook9629@bloomingbit.ioH3LLO, World! I am Uk Jin.