Shown above is the head office of Mirae Asset Securities. It has joined forces with SK Telecom to tap into the potential-loaded security token business. Photo courtesy of Mirae Asset Securities

Two business bellwethers to build the Next Finance Initiative

South Korea’s leading brokerage Mirae Asset Securities announced on March 30 that it had teamed up with the country’s top wireless operator SK Telecom to tap into the security token business.

Toward that end, the two corporations signed a memorandum of understanding to establish a consortium named the Next Finance Initiative (NFI).

The two-way alliance takes place a month after the country’s financial regulator disclosed its plan to regulate security token offerings about some digital assets.

The NFI is expected to bring together the financial investment infrastructure and global network of Mirae Asset along with the technological competitiveness and platform know-how of SK Telecom.

By attracting other representative companies of the country to the NFI, Mirae Asset said that it would put forth efforts to build an eco-system for the security token business.

In addition, the newly-established consortium would play a key role as an incubator or accelerator to help startups or project owners, which want to take advantage of the security token platform.

“On the back of Mirae Asset’s financial expertise and SK Telecom’s info-tech technology, we will be able to come up with a global platform to spearhead the token security business,” said Ahn In-seong who leads Mirae Asset Securities’ digital division.

SK Telecom Executive Vice President Oh Se-hyun also expressed his hype on the cross-industry cooperation. He leads the telecom carrier’s Web3 business.

Otherwise dubbed web 3.0, web3 is an idea that the future of the internet will involve such concepts as decentralization, blockchain technologies, and token-based economics.

“A token security is a starting point where Web3 meets the traditional financial market. Through it, we will make a foundation to develop various projects powered by Web3 philosophy and innovation,” he said.

A security token

A security token refers to the latest financial instrument designed to represent an ownership interest in an asset. As a regulated digital asset, it tends to use such latest technologies as decentralized networks and smart contracts.

Any kind of asset, like stocks, bonds, and real estates, can be tokenized. Backed by real-life assets, it is aimed at raising funds from accredited investors from across the world.

This is why security token offerings are gaining attention among startups as an alternative to a private equity fund, venture capital, or initial coin offerings.

In return, investors, or the token holders, gain certain rights, including dividends, profit sharing, buy-back right, and voting right, to name but a few.

In February, the Financial Services Commission released guidelines on security token offerings, claiming to regulate ones backed by investment contract securities and beneficiary certificates.

However, the commission argued that such a move was not geared toward preventing the development of new financial instruments. It was about protecting investors, it said.