[STO Summit] "Overseas looking for investment opportunities in Korea... Urgent need for quick STO legislation"

[Source] https://www.edaily.co.kr/news/read?newsId=03585046635804080&mediaCodeNo=257

“Korea, lack of legislation… Difficult to activate STO”

Singapore, ahead of STO, has flexible regulation of token securities issuance

“Terra/Klaytn incident tarnishes Korea’s impression abroad”

“A healthy market must be formed…investor protection is also important.”

[Edaily Market-in Reporter Kim Seong-soo and Kim Yeon-ji, Economist Market-in Reporter Song Jae-min] “As K-content is popular around the world, there are many companies overseas trying to find investment opportunities in Korea. “If the domestic securities token issuance (STO) institutionalization progresses quickly, we can see that we can dominate the global market.” (Min Kyung-man, CEO of Alchemic Investments)

“Unfortunately, the impression of Korea at blockchain conferences around the world, including Singapore, is the ‘Terra incident’ and ‘Klaytn.’ “I hope that companies that have been solidly established in Korea, such as Buysell Standard, will enter the global market and make themselves known as Korean companies.” (Chae Hoon, CEO of Blue Helix Korea)

[Edaily Reporter Kim Tae-hyung] Chae Hoon (from left), CEO of Blue Helix Korea, Kyung-man Min, CEO of Alchemic Investments, Bae Sang-seung, CEO of New Paradigm Investment, and Aaron Ong, CEO of IX Swap, held the 'Edaily Global STO (STO)' held at KG Tower in Jung-gu, Seoul on the morning of the 9th. A panel discussion is being held at the ‘Security Token Offering’ Summit. 

Domestic STO industry experts agreed on this at a panel discussion at the ‘Edaily Global STO (Security Token Offering) Summit’ held at KG Harmony Hall, KG Tower, Jung-gu, Seoul on the 9th. The opinion is that the government needs to quickly legislate as the domestic STO market has insufficient STO-related laws and systems compared to overseas, making it difficult to revitalize the market. In particular, it is necessary to refer to the case of Singapore, where regulations related to the issuance of token securities are more flexible than those of Korea. 

“In Korea, it is more difficult to issue an STO than in Singapore.” 

The Monetary Authority of Singapore is supporting the STO ecosystem through active regulatory discussions. Such innovation was possible thanks to DeFi (decentralized finance). ‘DeFi’ means ‘decentralized distributed finance or distributed finance’. It mainly works by putting cryptocurrency as collateral and receiving a loan of a certain amount, or providing other collateral and borrowing cryptocurrency.

Aaron Ong, CEO of IX Swap, said, “Singapore has always been quick to open its eyes to innovative finance, including fintech. I think token securities in Singapore are no different from other existing investment destinations in that they pursue profits.” He added, “There is no difficulty in issuing it as long as the regulations are implemented and DeFi performs the due diligence conditions well.”

He explained, “Thanks to their previous experience, major banks are participating in the market through the STO Association, etc.” and “Some companies are promoting an STO platform in Singapore, and one company recently said it would create an STO exchange.”

  On the other hand, in Korea, following Music Cow and Casa Korea, works of art applied for a regulatory sandbox, but were not actually recognized. This is because the price volatility of STO products is high and the number of market participants is not wide, so the scope for public recognition is limited.

Bae Sang-seung, CEO of New Paradigm Investment, who discovered piece investment startup Vicell Standard, said, “We believe that it is still difficult to invest in companies currently in the regulatory sandbox,” and added, “Issuance of token securities through revision of the Capital Market Act “We are open to the possibility of investing in commercialization through distribution,” he said.

A regulatory sandbox refers to a system that does not apply all or part of the current regulations so that business operators can test and verify new products and services using new technologies by first launching them into the market under certain conditions (limits on time, location, and scale). It is a system that rationally improves regulations based on the data collected during this process.

Chae Hoon, CEO of Blue Helix Korea, said, “In Korea, 95% of STO companies have not entered the regulatory sandbox, making it difficult to issue token securities. On the other hand, if they go to Singapore and find a good partner, they can issue them right away.” He explained. He added, “For businessmen who need to respond quickly to the market, this may be Korea’s weakness.”

“We need to create a healthy market… Investor protection is also important.” 

In particular, there was an opinion that the process of legislating STO should be done at the level of forming a healthy market, not as a temporary fad. It is of the opinion that ‘investor protection’ should also be considered as an important consideration in this process.This is because Korea’s image in the global blockchain market has been tarnished by the ‘Terra incident’ and ‘Klayton’. The Terra/Luna incident is an incident in which TerraUSD (UST), the cryptocurrency of Terraform Labs founded by developers Do-hyung Kwon and Hyun-seong Shin, and its sister coin Luna (LUNA), which were designed to maintain its value, plummeted around May of last year.

The damage caused by the Terra/Luna crash was estimated at approximately $45 billion (approximately KRW 59 trillion) worldwide. Klaytn is a coin developed by Kakao. Kakao founder Kim Beom-soo and key current and former executives were accused of embezzlement and breach of trust through the virtual asset ‘Klay’.

CEO Bae Sang-seung said, “Looking back at past cases of initial coin offering (ICO) and blockchain markets, it took a long time for a problem to arise and a policy to deal with it to be developed and implemented after a legislative meeting.” He added, “Korea is rapidly enacting legislation related to the STO market.” “I hope we don’t repeat this experience,” he said.

Min Kyung-man, CEO of Alchemic Investments, said, “As K-content is popular around the world, there are many companies overseas trying to find investment opportunities in Korea.” He added, “If the domestic STO institutionalization progresses quickly, I see an opportunity to dominate the global market. “I hope that aspect goes well,” he said.

Representative Min said, “There have been cases in the past where blockchain and non-fungible tokens (NFTs) spread like a ‘fad,’ so I am concerned that (STO) may still be a kind of boom.” He added, “We also established a regulatory sandbox in 2018 to legislate and “There was a movement to revitalize it,” he said.

He emphasized, “Now, as the number of market participants (players) increases and an appropriate environment has been created, legislation is being created,” adding, “I hope that this process will not stop as a temporary fad and contribute to the creation of a healthy market.”

However, “It is still too early for individual investors to invest in STO companies,” he said. “I think the right order is for venture capital (VC) like us to discover companies and create regulations related to investor protection, and then for individual investors to participate.” “He said.

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