To explore the regulatory considerations for fintech blockchain fractional investments through Security Token Offerings (STOs) in South Korea, advanced legislative frameworks in the United States, United Kingdom, Switzerland, Singapore, and the EU were reviewed. The paper presents necessary legal adjustments to accommodate STOs within South Korea's capital market.
Two main legislative amendments are proposed:
1. Amendments to the Electronic Securities Act: Establishing new token securities and issuer account management institutions to determine the security nature.
2. Amendments to the Capital Markets Act: Facilitating the distribution of investment contract securities and beneficiary securities and establishing authorization for over-the-counter (OTC) trading intermediaries.
These amendments aim to provide a legal guideline for securitizing various rights that were difficult to issue under the traditional electronic securities system dominated by financial institutions. By digitalizing these non-standard securities, they can be traded conveniently, thus promoting the innovation of token securities.
This regulatory framework will ensure that the innovation brought by token securities can be integrated within the capital market system, providing convenience in transactions and protecting investors' rights.