Introduction to Tokenized Securities
In a significant move towards integrating blockchain technology into its financial markets, Hanwha Investment & Securities has successfully developed a tokenized securities platform, with support for the Avalanche network. This advancement comes as South Korea gears up for the official incorporation of blockchain-based securities into its regulated capital markets, scheduled for February 2027.
Development and Collaboration
The development of this innovative platform began in 2025 in collaboration with FairSquare Lab, a leading blockchain tech firm. Notably, the platform is designed to function across various distributed networks, including Avalanche and Hyperledger Besu, which is geared for enterprise use and compatible with Ethereum applications.
Regulatory Framework
As regulatory changes from South Korea’s Electronic Securities Act and Capital Markets Act take effect on February 4, 2027, distributed ledgers will be mandated as legitimate securities registers. This legal framework will enable tokenized securities to circulate within the already established capital markets of the country.
Infrastructure and Compatibility
To facilitate this transition, the Korea Securities Depository (KSD) is also preparing its infrastructure to ensure compatibility with multiple blockchain technologies, including Avalanche and Hyperledger Fabric. The engagement of the KSD indicates an intention to keep participation in the distributed ledger systems restricted to vetted financial institutions, including securities firms and the depository itself.
Project Launch and Industry Demand
Reportedly, Hanwha launched its project last year and has completed its development phase, as confirmed by industry insiders. The addition of Avalanche to the mix was driven by demand from financial institutions, as KSD officials noted that several firms expressed the need for support through consultations and ongoing projects.
International Context
In Japan, Avalanche has already been utilized for the regulated tokenization of securities. For instance, the Progmat platform transitioned its tokenized securities infrastructure onto a dedicated Avalanche Layer 1, successfully managing assets worth over 452 billion yen at the time. This migration allowed these securities to remain compliant with Ethereum’s standards while preserving institutional controls.
Future Plans and Implementation
As South Korea fine-tunes its operational framework for tokenized securities, the Financial Services Commission’s roadmap indicates a three-phase implementation plan beginning with privately pooled money market funds and certain bonds for institutional investors. Other offerings, such as unlisted shares issued under trust structures, will also be included in this early stage. The next phase will broaden this to cover all publicly offered securities, though a specific timeline has yet to be established.
Blockchain-Linked Payment Systems
Future expansions also aim to introduce blockchain-linked payment systems utilizing stablecoins, contingent on forthcoming legislation regarding stablecoins in South Korea. The foundational legal adjustments required to deploy distributed ledgers as securities registers were previously endorsed by the National Assembly.
Operational Requirements
Screens and operational tests will be mandatory for financial companies wishing to connect their distributed ledgers to the KSD, emphasizing the preservation of stability that mirrors current electronic securities systems. While financial institutions will not need a new license for tokenized securities activities within their licensed domains, any aspects relating to over-the-counter markets will require prior consultation with the Financial Supervisory Service.
Conclusion
The entry of Hanwha into the tokenization space represents a broader trend in South Korea’s financial sector, which includes significant investments in blockchain technology from prominent firms. As evidence of its growing stakes in the field, Hanwha recently became a major shareholder in Securitize, amassing a 9.6% interest across its affiliates. This investment aligns with Hanwha’s strategic focus on digital asset infrastructures and real-world asset tokenization.
Overall, this ongoing initiative underscores South Korea’s commitment to establishing a robust framework for tokenized securities, which aims to involve several major players in the blockchain ecosystem as they prepare for the upcoming market changes.
