In a significant development, several influential lenders in South Korea have now become part of a bank consortium. This consortium, led by Seoul’s NongHyup, centers around the exciting new world of security token offerings (STOs). These STOs, unique to South Korea, are essentially traditional investments with a twist. They exist on blockchain or DLT, representing assets like stocks, bonds, or even art and real estate ownership.
On Thursday, the Korea Herald revealed a notable update. Hana Bank, Shinhan Bank, and Woori Bank have joined NongHyup’s innovative consortium. Fintech firms such as Funble, Trackchain, and Artipio have also joined in, pushing the consortium’s member count to 18.
Earlier this year, South Korea responded to the skyrocketing demand for digital assets by legalizing security token offerings. Consequently, the Financial Services Commission of South Korea rolled out guidelines for these tokens in February. Under these guidelines, STOs now fall within the country’s capital markets law.
South Korea saw STOs first emerge around 2019. Although it’s still an evolving market, analysts predict a significant potential for growth. By 2024, the Korea Herald estimates it could reach 34 trillion won ($26.6 billion).
To create this consortium, NongHyup has allied with Suhyup, Jeonbuk, and six security token-related firms, including Seoul Auction Blue, Galaxy Money Tree, and JB Investment. According to reports, consortium members will collectively explore ways to penetrate the STO market. However, they aim to achieve this while fully complying with regulatory guidelines.
Besides, they intend to co-develop platforms to issue token securities. Ultimately, their goal is to construct a tokenized securities ecosystem. Here, companies can issue corporate bonds as security tokens that can be traded freely.
The tokenization trend is gaining traction across multiple blockchain ecosystems. In 2023, prominent institutions such as Goldman Sachs and Siemens began embracing tokenized assets. Therefore, the move by South Korean banks further reinforces the growing global interest in this field.
