Samsung SDS has won a contract with the Korea Securities Depository (KSD) to develop a solution for security tokens. While this may sound similar to tokenization initiatives by central securities depositories (CSDs) in other jurisdictions such as Clearstream, DTCC and Euroclear, the project differs in several significant ways.
As context, KSD is a public body and hence has somewhat different objectives compared to the other private sector CSDs, including KSD having a supervisory role. At this stage, the securities that the KSD system will cover are real world asset (RWA) securities such as tokenized real estate, fractional art and intellectual property tokens, rather than tokenized stocks or bonds. While the legislation passed in January recognizes tokenized stocks and bonds as equivalent to conventional versions, the regulatory unlock is for OTC trading of fractional RWA tokens, rather than stocks and bonds.
Samsung SDS previously built a testbed and this is now being developed into a production grade platform. A key role of KSD is to monitor the total issuance of a security, keeping track of tokens in circulation across multiple blockchains. KSD first proposed taking on this role three years ago. Hence, it will operate nodes on those chains, and is responsible for specifying which distributed ledgers are allowed to be used. After all, it has to get a node up and running before it can monitor the issuance.
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