Making blockchain-based tokens operational here is a part of South Korea's "serious" efforts in adopting regulatory changes to make its capital market more attractive to foreign investors, the top financial regulator said Friday.

Financial Services Commission Vice Chairman Kim So-young stressed that recently released guidelines on security tokens were created to “allow issuance of blockchain-powered digital tokens," during a press conference with foreign media outlets held at the Korea Press Center in central Seoul on Friday.

“There are concerns over the new guideline in the market, but our intention is not to regulate security tokens but allow issuance and distribution,” Kim said.

He explained that just like the way securities are issued under regulations, the same concept is being applied to security tokens.

The guideline that he referred to was announced by the FSC earlier this month. It stated that digital assets that provide the rights to dividends or residual assets will be categorized as security tokens and be regulated.

Kim also said the FSC plans to allow issuers that meet certain qualifications to issue security tokens on their own without going through securities firms.

"We will mobilize all possible policy capabilities on enhancing the global competitiveness of the Korean capital market and financial investment industry," he said, adding that the government takes those issues "more seriously" than ever.

During the press conference, Kim introduced three pillars of the country's efforts to advance the capital market -- improvement of the foreign investment environment, improvement of the rights and interests of minority shareholders and expansion of the capital market and enhancement of reliability.

Kim also noted that the FSC does not plan to fully allow short selling in Korea soon.

“There are other tasks that we have to tackle to improve the capital market in front of us, and we only think of fully allowing short selling as one of many tasks,” Kim said.

The government temporarily banned short selling to defend the stock market from falling at the start of the COVID-19 pandemic. In May 2021, the government started allowing short selling of only Kospi 200 and Kosdaq 150 stocks.

This restriction has been considered one of the factors that makes the Korean market less appealing to foreign investors.

It also has been considered a hurdle that hinders the country’s stock market from being included in the top grade of global market indices. The government has been seeking to get the Korean equity market upgraded to “developed” status from the current “emerging” status by New York-based index provider Morgan Stanley Capital International.

Other high priority tasks that the FSC will work on include extending the operating hours of the foreign exchange market and repealing the registration requirement for foreign investors.

Kim also said the FSC will work on making improvements so that foreign investors can get disclosure filings in English for listed companies and be informed of dividend information before they make investment decisions.