[Delio] Delio to offer OTC trading service for security tokens by acquiring OTC brokerage business
Cryptobank Delio announced on February 14th that it plans to offer Over-the-Counter (OTC) trading services for security token offerings (STOs) aiming to keep pace with the institutionalization of security tokens in South Korea.
On May 5, the Financial Services Commission of South Korea released guidelines for STOs, revealing that it plans to fully legalize the market under the regulations of the Capital Markets Act. The STO guidelines, in which financial authorities such as the Financial Services Commission and the Financial Supervisory Service participated, describe the criteria for determining whether digital assets are securities, as well as the regulatory system for issuing and distributing security tokens to be established in the future.
A security token is a relatively new type of investment asset based on distributed ledger technology and owned or traded in the same way as a stock or a bond. Although security tokens are similar to electronic securities in the way that the transactions are digitalized, they are distinguishable because they use decentralized distributed ledger technology instead of a centralized register at a financial institution.
As the era of tokenized securities boom, the traditional securities industry is also speeding up to preempt STOs, the future financial industry. Thus, Shinhan Investment & Securities, a South Korea-based financial service provider, is planning to build an STO ecosystem through the STO Alliance, while Kiwoom Securities, an online brokerage service, and Daesang Securities, a local food business, are reportedly preparing to invest in pieces.
According to the guidelines, security token is a form of security issued under the Electronic Securities Act system. The financial regulator has established an OTC brokerage business to allow OTC companies to enter the security token distribution business. “In line with this market trend, we plan to acquire an ‘OTC Trading Intermediary’ license to support distributed ledger-based STO trading and related financial services in the OTC market,” Delio said.
Since 2019, Delio has been providing services such as storage, trading, and management of digital assets such as Bitcoin (BTC), Ethereum (ETH), and NFTs. In 2021, it developed and completed the test operation of ‘STO Swap’, a decentralized token security trading platform, and has relevant technology and experience.
Delio also runs Vault, a digital asset wallet, which allows to apply of the existing service to token securities as it is. Moreover, is in the process of upgrading to a ‘Web 3.0 wallet’ that enables trading and custody of non-distributed ledger-based token securities.
Delio has accumulated 2.4 trillion KRW ($847,760 million) in digital asset deposits and loans. “We have a large number of service users who are familiar with digital asset trading. In addition to trading token securities, we can provide various financial services such as storage, deposit, lending, and management. If we can acquire an ‘OTC broker’ license and provide token securities services, we will have a high level of competitiveness.”
Moreover, Delio can be served as an account management organization for STO issuers. The biggest advantage of Delio is that it has secured legal stability in the digital asset business by obtaining a virtual asset service provider (VASP) license from the financial authorities under the Special Act last year.”
“In response to the announcement of the guidelines, we have formed an in-house security tokens sandbox TF (task force) and are working on preparing STOs-related services,” said James Jung, CEO of Delio. “We also plan to select related services through the financial regulatory Sandbox and formally acquire an OTC brokerage business after the law is amended,” he added.