The Korea Blockchain Industry Promotion Association said on Nov. 3 that it has submitted comments to South Korea’s Financial Services Commission on proposed amendments to lower-level rules for token securities. Its recommendations focus on who should be allowed to take part in key infrastructure, how investor safeguards should work, and how secondary trading should be developed.
According to the association, the current discussion should not be limited to securities firms and existing financial institutions. It argued that the token securities framework needs clearer participation standards, stronger continuity measures, and a more defined path for market expansion if the system is to develop on a stable basis.
Call to broaden validator participation
A central point in KBIPA’s submission is that participation in distributed ledger validation should not be reserved only for securities companies and traditional financial institutions. The group proposed that technology companies and operators involved in fractional investment should also be given a legal basis to participate, provided they satisfy specified requirements.
KBIPA also said settlement-related institutions should be able to join distributed ledgers. It specifically mentioned entities such as the Bank of Korea, arguing that this would help support a delivery-versus-payment, or DvP, structure for token securities transactions.
Investor protection proposals
The association paired its market-access proposals with requests for stricter investor protections. It said changes to distributed ledger operating rules should be disclosed in advance and opened to a public comment process rather than introduced without notice.
KBIPA further suggested that any revised requirements should only take effect after a six-month grace period. In its view, that delay would give market participants time to adjust while reducing the risk of disruption for holders and service operators.
Continuity if a ledger becomes unusable
Another issue raised in the comments concerns operational continuity. KBIPA said there should be a legal basis for moving token securities to another qualified distributed ledger if the ledger already in use can no longer operate or otherwise becomes unavailable.
The association framed this as part of protecting investor rights while maintaining continuity in issuance and distribution. It said participation requirements and responsibilities should be clarified without eliminating flexibility over technology choices.
Pressure for a clearer secondary-market roadmap
KBIPA also pressed regulators to address the secondary market more directly. It noted that investment contract securities can be electronically registered on distributed ledgers, but they are excluded from authorization for multilateral over-the-counter trading.
On that basis, the association asked authorities to clarify whether they plan to create an authorization framework for such trading and, if so, when that review would take place. The request points to a broader concern that issuance rules may advance faster than the mechanisms needed for post-issuance trading.
For now, the confirmed next step is that the FSC has received the industry association’s comments as part of the rulemaking process. KBIPA’s position is that a durable token securities regime will require broader but clearly defined participation, safeguards for investors, and a transparent timetable for expanding the market beyond initial issuance.
Source: en.bloomingbit.io