Cloud Mining and Liquid Staking May Have Securities Characteristics in South Korean Capital Markets Law, Academic Study Analyzes

According to a research paper published by Professor Hur Yu-kyung of Saint Thomas University Law School and Justice Ministry spokesperson Choi Tae-eun in the Korea Securities Law Association's May issue, cloud mining, mining hosting, and mining funds may possess securities characteristics under South Korean capital markets law.

The paper analyzed statements from the U.S. Securities and Exchange Commission's Corporate Finance Division and examined their applicability under South Korean investment contract securities regulations. The authors found that cloud mining and mining funds, where investors entrust capital to third parties for profit distribution, are likely to be recognized as securities. For liquid staking, securities characteristics may be recognized if issued and traded as investment contracts with substantive business decisions and efforts by service providers. However, traditional proof-of-work mining, solo staking, and custody staking are unlikely to meet securities criteria, as they operate under protocol rules rather than relying on third-party business efforts.