“It’s Hard to Innovate”…STO Industry ‘Suspiration’ From Securities Companies to Startups

Securities firms struggling to secure STO customers
Domestic ST Startups Are Turning to Overseas
“Sto enterprises must promote investment and exchange technology”

This article has been translated into English through AI.

[Edaily Marketin Reporter Kim Yeon-seo] While the domestic token securities issuance (STO) market is growing mainly in fragmented investment services, the emergence of startups that come up with new products is decreasing. The securities industry, which has started the STO business, is creating a structure to issue token securities through collaboration with startups, but it is difficult to find startups that will join hands.

According to the financial investment industry on Thursday, securities firms are using STO as a new food item to enter the market, but are having difficulty in securing customers. There are no start-ups that can come up with innovative token securities products. “We are looking forward to collaborating with start-ups based on innovative items, but few places are bringing products that can be realized,” said an STO business representative at a securities firm.

In fact, most of them disappeared except for existing sculpture investment companies such as real estate, music copyrights, and art. The industry says that startups will inevitably have difficulty entering the business as there is no progress in institutionalizing STO.

Some start-ups that have completed the concept of token securities items seem to be turning to overseas expansion as domestic institutionalization has been delayed. Promising STO start-ups in Korea, such as YouTube investment platform Socialus, aviation lease management startup VMIC, and scale-up investment company Nanum Angels, have already started preparing to enter the Singapore market.

On the other hand, it is difficult for start-ups to jump into the domestic STO market. In order to operate token securities business in Korea, products must be issued through trust beneficiary certificates or investment contract securities. In the case of trust beneficiary securities, it is necessary to issue them after obtaining approval for innovative financial services from the Financial Services Commission, but due to the difficult screening process, it is not easy to pass the screening even if large companies jointly release products. In the case of investment contract securities, this is also not easy because hundreds of pages of securities report must be prepared.

Some analysts say that the severe period of investment in startups, which continued since last year, has affected the STO market. In fact, due to the hike in the benchmark interest rate last year, early start-ups in the domestic venture capital (VC) market are having difficulty raising funds and attracting new investments this year. As the investment industry’s understanding of the STO market is low, the environment is limited to secure business funds.

An STO startup official said, “We are rounding investments to receive seed investment, but we are having difficulty securing funds due to the overall bad market atmosphere,” adding, “In particular, venture capital (VC) are preparing to receive investment mainly by asset managers because they are less interested in the STO market.”

Meanwhile, as Kim Byung-hwan, the new chairman of the Financial Services Commission, officially took office on the 31st of last month, expectations for institutionalization of the STO are growing. However, it is unclear whether the authorities will be able to draw attention to the STO industry as there are a number of financial issues that need to be resolved, including the Timon and Wemakeff cases. As the National Assembly’s interest in legislation wanes, there are concerns that the existing platforms’ position could be dampened.

Industry sources say that investment in STO startups and technology exchanges in the industry are needed. “It is not easy to create innovative token securities products due to the limited environment,” an STO industry official said. “We hope that STO legislation will take place soon and the STO market will be enlightened.”