KB Securities Co. plans to apply for two or more regulatory exemptions concerning security tokens in the first half this year, according to the company on Tuesday, amid forecasts of the commercialization of security token offerings (STOs) as early as next year.

“We’re seeking regulatory sandboxes with our partners concerning our projects that involve renewable energy assets and intellectual property,” said one official from the securities firm. In March, the firm signed a memorandum of understanding with Korea East-West Power Co. and security token platform developer Hikive for the renewable energy assets project.

KB Securities aims to develop a complete business model as early as this year after working through regulatory sandboxes in the development stages. With approval for regulatory sandboxes, the firm can enjoy exemptions from existing guidelines announced by the Financial Services Commission in February, though further changes in the legal framework will be needed for the firm to actually pursue the STO business, including relevant law amendments.

The firm’s aggressive steps seem to be coming from belief that being an early player in the market is important. Since November, the company has developed the basic infrastructure for the issuance and distribution of the tokens, and through tests it has already internally identified key issues for revision, including blockchain methods for recording the ownership of the tokens and considerations when linked with internal systems.

Starting at the beginning of this year, KB Securities has been trying to expand the business further by launching ST Owners, a business group consisting of STO service providers, in March. At present, 10 security token issuance companies and five technology companies have been participating in the group. “Though there are some technical issues for now, like speed and stability, we could seek more business opportunities once we have verified stability. To this end, we continue to seek collaboration with blockchain specialists,” the company explained.

KB Securities sees potentials in the security token business as it assumes the STO business might be expanded to platform businesses. Security tokens are investment vehicles that fall between traditional fractional investments and coin offerings.

By Kim Myung-hwan and Chang Iou-chung

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