Ripple Encourages South Korean Regulators To Adopt A More Targeted Approach To Crypto Assets

Ripple highlighted crypto clarity rules in South Korea. (Photo; Doc. Bitcoinist)

JAKARTA - Digital asset regulation continues to be a hot topic worldwide as the market develops rapidly. South Korea is no exception, where the government has introduced regulations for Virtual Asset Service Providers (VASPs) to address consumer protection and risk management.

According to the DailyCoin report, the broad scope of implementation has posed challenges for companies providing digital asset solutions that are not VASPs, leading to a cautious approach by domestic companies.

Addressing this issue, Ripple's most recent press release, dated March 14, 2023, emphasizes the importance of regulatory clarity and a clear taxonomy for digital assets in South Korea.

This blockchain-based digital asset company believes that the information they provide is critical to ensuring consumer protection and managing risk in rapidly evolving markets.

Ripple has stated that South Korean regulators and policymakers need to review licensing requirements and consider a more targeted approach to regulation that does not stifle innovation.

The blockchain company argues that South Korea's "one-size-fits-all" approach will not be suitable for all digital assets and that more nuanced regulation will be needed.

To further address the challenges facing the digital asset sector in South Korea, Ripple recommends making efforts to educate consumers about the risks associated with investing in digital assets and put in place stronger consumer protection measures.

This complements the recently published guidelines from the Financial Services Commission (FSC) of South Korea for defining digital assets as security tokens (STO). This outline is a significant step towards regulatory clarity for the digital asset sector in the country.

These guidelines outline the characteristics that a digital asset must possess to be considered an STO, including providing a stake in the operation of the business, having rights to dividends or residual property, and attributing profits generated from the business to investors.

Ripple's press release refers to a previous whitepaper written on March 14, 2022, which emphasized the importance of regulatory changes to drive innovation in the South Korean digital asset market. The white paper also suggests policy recommendations to achieve this goal.

An important part of the policy framework is adopting a clear digital asset taxonomy that aligns with global best practice. They stated that this would help differentiate between payment tokens, utility tokens, and security tokens, ensuring that each type of digital asset is subject to appropriate regulation.