As South Korea's securities industry moves into competition to commercialise digital asset businesses, Hanwha Investment & Securities, which declared in October last year that it would become a "specialist digital asset brokerage", is also stepping up its efforts. The firm plans to expand investment and collaboration with digital asset companies while pursuing a domestic token securities business and an overseas real-world asset (RWA) tokenisation business in line with digital asset regulation.

Byung-chul Lee (이병철), head of Hanwha Investment & Securities' Digital Asset (DA) Platform team, said in an interview with DigitalToday that it aims to build a platform business structure linking everything from product discovery to issuance and subscription, and on to wallets and custody, in cooperation with global specialist companies.

◆Expanding the existing securities business... tokenising financial products

Hanwha Investment & Securities' planned digital asset business is not a separate business detached from its existing securities business. It would convert financial investment products such as funds and bonds into tokens, issue them on a blockchain, recruit investors and enable trading.

Lee said the issuance, subscription, purchase and sale and trading processes are not significantly different from the arrangement, underwriting, issuance and brokerage work that securities firms already perform. He said the biggest difference is that the addition of digitised products can broaden the range of investment products and expand global connectivity.

◆Starting with institutional-grade RWAs rather than fractional investment

Hanwha Investment & Securities plans to prioritise offering institutional-grade products, which were difficult for retail investors to access, to professional investors, rather than existing fractional investment types such as splitting and selling small properties or artworks. It then plans to expand the underlying assets to real estate and unlisted companies and build portfolios tailored to return and risk preferences.

Lee said leading overseas cases focus on changing the environment so investors can invest in assets that were previously difficult or impossible to access.

◆Improving settlement and reconciliation efficiency with blockchain

He cited improved efficiency in settlement and reconciliation work at financial institutions as a reason for using blockchain. Existing financial firms must confirm whether counterparties have performed and go through reconciliation procedures to match deposit and withdrawal details and ledgers on a transaction-by-transaction basis.

He said recording transaction and holding details on a shared ledger can reduce verification steps and the possibility of errors, so initial demand is likely to be higher among institutions and in large-value transactions than among individuals. He also said it would be advantageous for connecting cross-border product issuance and investment.

Lee stressed that blockchain can bring big changes to back-office work, and said claims by some that blockchain eliminates all third parties or intermediaries are not correct.

Overseas platforms plan to gradually expand the scope of customers, investment products and services in line with licensing and market conditions.

◆Starting with issuance and underwriting... custody through partnerships

The initial revenue model will focus on issuing and underwriting tokenised products. For wallets, key management and custody, the firm plans to work with specialist partners in consideration of relevant licensing and regulation. It would issue external managers' funds or investment strategies in token form and recruit investors through subscription and sales.

In the long term, it is reviewing a plan to lower investment units so retail investors can access institutional-grade products and expand into a digitised asset management service that can be managed to suit individual return and risk preferences.

◆Linking the capabilities of invested companies to platform build-out

For building a global platform, it plans to connect the capabilities of digital asset companies it has invested in. With Xangle, it is discussing on-chain data and research, platform structure and regulatory responses. With Crysus, it will cooperate on overseas platform infrastructure and wallet and key management. Through Securitize, it will identify tokenised products to sell on the platform, and on Digital Asset's Canton Network it plans to pursue issuance of its first product.

The Canton Network is a finance-focused blockchain designed to connect assets and data from different financial institutions while sharing necessary information only between transaction parties. Hanwha Investment & Securities invested about 30 billion won in Digital Asset in July and joined the Canton Network ecosystem.

With Dunamu, it is reviewing ways to combine traditional finance and digital assets and cooperate on blockchain infrastructure. In June, Hanwha Investment & Securities additionally acquired 1,361,050 shares of Dunamu (3.90%) that Kakao Investment held for about 597.8 billion won. Its holdings rose to 3,430,500 shares and its stake increased to 9.84% from 5.94%, making it Dunamu's third-largest shareholder.

◆Pursuing global business alongside delays to the Digital Asset Basic Act

Hanwha Investment & Securities is also pursuing a global platform business in case domestic digital asset制度 improvements are delayed. As it cannot launch related services before laws and licensing are in place, it plans to align the domestic schedule with regulatory progress while continuing overseas business preparations.

It will approach investor protection by separating the domestic token securities business and the global platform. For domestic token securities, it plans to apply the existing securities industry's compliance monitoring and financial consumer protection system, and use an electronic registration agency's total issuance management and technical safeguards from account management institutions and custody partners.

Lee said it will expand cross-border investment, a strength of blockchain, by linking Hanwha Investment & Securities' overseas network with the products, technology of global specialist companies.