Korea Investment & Securities teams up with internet banks for STO issuance

2023.05.23 12:24:01 | 2023.05.23 12:28:22

Korea Investment & Securities Co. headquarters in Seoul [Courtesy of Korea Investment & Securities]이미지 확대

Korea Investment & Securities Co. headquarters in Seoul [Courtesy of Korea Investment & Securities]

Korea Investment & Securities Co. is ramping up efforts in the field of security token offering (STO), which has garnered growing attention since South Korean financial authorities released related guidelines earlier this year.

The investment entity said on Monday that it launched the establishment of basic infrastructure for STO development this month. It plans to complete the platform construction as early as the end of this year.

An STO is a digital token supported by blockchain technology that represents a stake in real-world assets.

In February, the Financial Services Commission (FSC) introduced STO guidelines as part of the digital financial innovation initiative. The guidelines allow for the issuance and distribution of securities utilizing blockchain technology within the regulatory framework of the Capital Market Act.

The principle of separating token issuance and distribution is applied, with only securities firms being permitted to issue token securities.

As token securities are considered digital securities, the prior issuance of physical securities, in collaboration with securities firms as custodians, is mandatory according to the Electronic Securities Act.

An STO can be seen as a hybrid between traditional fractional investments and cryptocurrencies. This enables the division of investment amounts for various assets, allowing multiple investors to participate in a regulated securities market.

As part of the development, Korea Investment & Securities officially formed “Korea Investment ST Friends” last month, bringing together partners for business expansion.

Internet banks KakaoBank and Toss Bank participate as financial institution partners responsible for recording token securities on distributed ledgers. In addition, Kakao Enterprise, which conducted a pilot project for the Bank of Korea’s central bank digital currency (CBDC) experiment, joined as a technical partner for ledger construction.

“The first step in establishing an STO ecosystem is building an issuance infrastructure that can provide suitable products for token securities.,” said an unnamed official from Korea Investment & Securities. “Our goal is to expand into the leading STO ecosystem in Korea that prioritizes investor protection and system stability.”

By Park Yoon-yea and Minu Kim

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