Cha & Kwon Law Offices provided legal advisory services in connection with the issuance and prospective listing of a token used within a blockchain-based service, including a formal legal opinion on whether the token could be characterized as a security under Korean financial regulations.

The token was designed to perform multiple functions within the platform, including payment, rewards, and access to services. Its issuance structure, distribution model, and user-facing descriptions were set out in the whitepaper. Accordingly, a key issue was whether the business model described in the whitepaper and the role of the token could be interpreted as constituting a financial investment instrument or security under the Korean Capital Markets Act.

Based on a comprehensive review of the whitepaper and the actual token design and operational structure, Cha & Kwon Law Offices analyzed relevant guidelines issued by the Financial Services Commission and the Financial Supervisory Service, as well as statutory provisions and case law. The assessment focused on factors such as representations regarding profit expectations or value appreciation, the nature of rights granted to token holders, the linkage between the issuer’s business performance and token value, and the elements relevant to determining whether the token could qualify as an investment contract security.

As a result, the firm concluded that, within the scope described in the whitepaper, the token predominantly exhibited characteristics of a functional utility token linked to platform usage, and that key elements required for classification as a security under the Capital Markets Act were not readily satisfied. The advisory also identified potential risk factors that could affect the securities analysis if the whitepaper, token distribution model, or business structure were modified in the future.