South Korea’s largest commercial banks exploring security token platforms

NongHyup Bank revealed that the leading banks in South Korea, including Industrial Bank of Korea, Shinhan Bank, and Woori Bank, have joined its consortium for security token offerings.

The consortium has also witnessed the participation of other financial technology companies such as Funble, Trackchain (a subsidiary of Aton), and Artipio (a fractional art investment subsidiary of Yes24), bringing the total number of participants to 18 firms.

STO market reaches $26 billion

NongHyup Bank, along with Suhyup Bank, Jeonbuk Bank, and six fractional investment firms, established a consortium in April to develop a security token ecosystem, as reported by The Korea Herald.

With the STO market predicted to reach 34 trillion won ($26.6 billion) in size next year, banking groups are increasingly showing interest, particularly due to the Financial Services Commission’s plans to ease regulations later this year. 

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NongHyup Bank’s consortium aims to facilitate banks’ entry into the STO market within regulatory frameworks and collaboratively establish platforms for issuing token securities, with a long-term goal of creating an STO securities ecosystem that enables the trading of corporate bond tokens.

Tokenization has gained significant traction within various blockchain ecosystems, with notable institutions like Goldman Sachs and Siemens embracing tokenized assets in different capacities throughout 2023.

The European Investment Bank (EIB) became the pioneering institution to collaborate with Goldman Sachs by launching its first digital bond on a private blockchain. Building on this success, the EIB has recently issued its second euro-denominated digital bond through the same partnership.

Meanwhile, global investment manager Hamilton Lane is also capitalizing on the potential of blockchain by announcing the tokenization of select investment products on the Polygon blockchain.

In collaboration with digital asset securities firm Securitize, Hamilton Lane will offer certain U.S. investors access to their flagship direct equity fund via newly introduced tokenized feeder funds.

This growing trend highlights the increasing popularity and adoption of tokenization as a transformative tool in the financial industry.

A hotbed for cryptocurrency activities

South Korea has emerged as a prominent hub for digital asset trading since 2017, when Samsung, the country’s largest conglomerate, expressed its interest in exploring corporate applications for Ethereum.

Since then, South Korea’s crypto industry has experienced exponential growth, with its exchanges accounting for a significant share of global digital asset trading volume. 

Another important contributing factor to this surge in South Korea’s crypto market is the absence of taxes on digital assets which have been postponed until 2025.

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