Moves by South Korea’s financial sector to secure stakes in digital asset exchanges are accelerating. As signs emerge that the so-called separation of finance and digital assets may ease, major financial groups and conglomerate affiliates are increasingly investing in exchange stakes.

According to the digital asset industry on May 29, Coinone held a signing ceremony for a strategic equity investment agreement at its headquarters in Yeouido with Korea Investment Securities, OKX Ventures and Com2uS Holdings.

The investment will be carried out through Korea Investment Securities and OKX Ventures acquiring part of existing shares held by Coinone CEO Cha Myung-hoon (차명훈) and second-largest shareholder Com2uS Holdings, as well as newly issued Coinone shares. Korea Investment Securities and OKX Ventures will each acquire a 20 percent stake in Coinone.

After the investment, Coinone’s ownership will be reorganised with Cha holding 30.36 percent, Com2uS Holdings 24.54 percent, Korea Investment Securities 20 percent and OKX Ventures 20 percent. Cha will remain the largest shareholder after the investment, and there will be no change in management control.

Korea Investment Securities plans to use the investment as a starting point to accelerate the integration of traditional finance and digital assets. As discussions continue on legislation for digital assets such as security tokens (STO) and stablecoins, it aims to lay the groundwork for new businesses by combining Coinone’s blockchain technology with Korea Investment Securities’ financial services, internal controls and risk management capabilities.

Kim Sung-hwan (김성환), CEO of Korea Investment Securities, said, "The first step has begun to move beyond the boundaries of traditional finance and enter new blockchain-based digital finance businesses." He said the companies would combine services and technology from Korea Investment Securities, Coinone, OKX and Com2uS to create business synergies and take the lead in the digital finance market.

The participation of OKX Ventures is also expected to help Coinone strengthen its ability to respond to overseas markets. Coinone plans to strengthen cooperation with OKX in areas including user protection, operational stability, security systems and risk management, and respond to changes in the institutional and corporate investment environment.

◆ Stake-buying race spreads to Dunamu, Korbit and Coinone

This year, investments by traditional financial firms and conglomerate affiliates in digital asset exchanges have spread to major platforms including Dunamu and Korbit.

Affiliates of Hana Financial Group moved to secure a stake in Dunamu, which operates Upbit, and Hanwha Investment & Securities decided to increase its stake in Dunamu. Samsung Group affiliates such as Samsung Securities, Samsung SDS and Samsung Card also decided to invest in Dunamu. Mirae Asset Group is pursuing an acquisition of a stake in Korbit through Mirae Asset Consulting, a non-financial affiliate.

Behind the financial sector’s push to secure exchange stakes is the potential institutionalisation of the digital asset market. The Basic Act on Digital Assets has not yet been finalised, but if the market expands into areas such as won-based stablecoins, security tokens and real world assets (RWA), exchanges could play a central role in distribution and customer contact, the report said.

Lee Jun-ho (이준호), an analyst at Hana Securities, said domestic traditional financial firms’ efforts to secure exchange stakes are pre-emptive investments to enter the digital asset market, including won-based stablecoins.

He also said the domestic digital asset market is likely to open in the future in the form of a consortium involving banks, securities firms, big tech companies and exchanges.

◆ Expectations for easing separation rules act as catalyst

Expectations that the separation of finance and digital assets could be eased are also influencing the rise in financial-sector investment in exchange stakes. The separation policy has been a regulatory stance that separated financial firms from the digital asset industry and restricted financial firms from holding, purchasing or taking digital assets as collateral, as well as from equity investments. It was administrative guidance rather than a law, but it acted as a strong constraint on the financial sector.

As discussions move quickly in major markets such as the United States and Hong Kong on spot digital asset exchange-traded funds (ETF), stablecoins and tokenised financial products, calls are growing in South Korea to review the existing regulatory framework.

Competition among global platforms that offer financial investment and digital asset trading together in a single app is also affecting discussions on easing the separation policy.

Financial authorities have also signalled the possibility of reviewing the separation stance in light of changes in the market environment. Financial Services Commission Chairman Lee Keun-woo (이억원) previously said in a 기자간담회 that the situation has changed since 2017, and stated that the separation regulation would also be reviewed during the second phase of digital asset legislation.

However, the policy direction has not been finalised. Issues such as the scope for financial firms to directly hold exchange stakes, whether brokerage of digital asset trading will be allowed, who can issue stablecoins and how roles will be divided between banks and exchanges are expected to be specified in the legislative process.

The industry expects the value of exchange stakes and the pace of a reshuffling of business leadership to vary depending on the speed of policy changes. For financial firms, securing exchange stakes means more than investment returns and reflects a bid to secure entry rights into future digital asset businesses. For exchanges, cooperation with the financial sector is a way to improve credibility, internal controls and responsiveness to corporate and institutional investors.

An official in the digital asset industry said, "Investments in exchange stakes are strongly characterised by an eye toward future business cooperation rather than simple financial investment." The official said cooperation between the financial sector and exchanges could become more active if easing the separation policy coincides with discussions on digital asset legislation.