Regulator categorizes Musicow as platform for trading of 'securities'

All News 15:55 April 20, 2022

SEOUL, April 20 (Yonhap) -- South Korea's financial regulator said Wednesday that Musicow Inc. should be regarded as a platform for the trading of "securities" and should be placed under the same regulatory monitoring as other similar investment vehicles.

The decision by the Financial Services Commission (FSC) came after a complaint was filed to ask for regulating the "unauthorized" pseudo investment platform that has been in the regulatory blind spot despite its similarities with stock trading.

Musicow, the country's first fractional trading platform connected to copyrights, has drawn keen attention, especially among younger people, as it allows them to buy and sell the rights to the profits generated from music copyrights.

The FSC said that trading on Musicow is tantamount to investing in securities, and the platform operator should comply with the same regulations as those applied to other financial services firms and come up with measures to protect investors.

The FSC ordered Musicow to draw up relevant measures, including changes in its business structure and ways to improve the protection of its investors within six months until Oct. 19.

Wednesday's decision marked the first of its kind that could have a far-reaching impact on similar investment schemes springing up in various fields, not just in copyrights in music but also in paintings and buildings.

Launched in 2016, Musicow has grown fast, buoyed by the global popularity of K-pop and growing interest in fractional investment that lowers the barrier to entry and allows retail investors to invest in large ticket assets.

As of 2021, the platform operator had 915,000 members, and its accumulated transactions totaled 274 billion won (US$222 million).

The company is currently preparing for an initial public offering.

The FSC called for extra caution in partaking in fractional investment, saying investors should closely study operation structures and risks. The regulator added it will unveil a guideline aimed at enhancing investor protection in the near future.