The focus of the digital asset market is shifting from “crypto trading” to “financial asset tokenization.” Global financial firms are converting safe assets such as U.S. treasuries and money market funds (MMFs) into blockchain-based products. Domestic securities firms are also jumping into the infrastructure competition targeting the real-world asset (RWA) and security token markets.
According to the industry, the Financial Services Commission (FSC) is designing detailed regulations with the goal of announcing amendments to lower statutes and guidelines for security tokens this July. The FSC is discussing allowing “pooling” that packages underlying assets for issuance, OTC exchange market structures, tokenization of standardized securities such as stocks, bonds, and MMFs, and the on-chain settlement roadmap. The focus of institutionalizing security tokens is also shifting beyond merely permitting issuance toward designing distribution and settlement infrastructure.
The center of gravity in the security token market is also moving from simple fractional investment to capital market infrastructure. While the initial market focused on equity-type investments in non-standardized assets such as real estate, artwork, and Hanwoo (Korean beef), the tokenization of existing standardized securities like stocks, bonds, and MMFs, along with the infrastructure for issuance, distribution, and settlement, is highly likely to become the core axis of competition in the future.
In the global market, tokenized finance has already established itself as a major strategy for institutional financial firms. The trend of global financial institutions, such as BlackRock, Circle, and JPMorgan Chase & Co. (JPMorgan), issuing MMFs and U.S. treasuries in tokenized forms on top of blockchains is spreading rapidly. These products are issued in the form of blockchain-based tokens, utilizing short-term U.S. treasuries, cash equivalents, repos, and MMFs as underlying assets. JPMorgan is expanding the institutional digital financial infrastructure market by consecutively releasing tokenized MMFs targeted at eligible investors.
The reason government bonds and MMFs are being tokenized first lies in their stability and liquidity. Unlike crypto assets with high price volatility, short-term treasuries and MMFs are regulatory-friendly and easy to liquidate. When combined with blockchain-based real-time transfer and settlement capabilities, they can be utilized as inter-institutional collateral, stablecoin reserves, and on-chain settlement assets.
In South Korea, the competition to build infrastructure is intensifying in line with the institutionalization schedule. Koscom Corp. (Koscom) is promoting the construction of a joint security token platform with securities firms. The organization is preparing the standardization of issuance and distribution infrastructure by expanding participating securities firms, including Kyobo Securities, Daol Investment & Securities, and Woori Investment & Securities. The Korea Securities Depository (KSD) is also stepping up to revamp infrastructure. The KSD has prepared pilot infrastructure to back the issuance and distribution of security tokens, such as total volume management, node management, and distributed ledger linkage, to prepare for the market after legislation.
Large securities firms are also preparing for the security token infrastructure competition. Mirae Asset Group is widening its scope across the overall digital asset value chain, including acquiring a stake in Korbit and securing blockchain development talent at Mirae Asset Securities. Hanwha Investment & Securities acquired an additional stake in Dunamu, the operator of Upbit. Believing that crypto asset exchanges will expand beyond simple brokerage to become complex infrastructure providers encompassing custody, settlement, and institutional services, Hanwha Investment & Securities is pushing to reinforce the digital asset value chain.
An industry official said, “Securities firms embarking on building joint platforms or investing in digital asset enterprises is also a movement to secure hegemony in the future security token market.”
