The STO era begins… Fragmented investment OTC exchanges, KRX·Nextrade two-power competition pattern

A fragmented investment over-the-counter exchange operator established to build the foundation for securities token offering (STO) market trading has selected two consortia led respectively by a Korean exchange and Nextrade. As financial regulators approach the substantial completion of the preliminary licensing process, the fragmented investment market is officially entering the regulatory framework.

At the meeting held on January 7, the Securities and Futures Commission under the Financial Committee reviewed the “Preliminary License Application for Fragmented Investment OTC Exchange Financial Investment Industry” proposal and decided to approve the consortium (KDX), jointly formed by the Korean Exchange and the Korea Securities Depository, as well as the consortium (NXT), composed of Nextrade-Musicow, as operators. The Lucent Block consortium, which submitted the application together, was not selected in this review.

Fragmented investment refers to the practice of dividing high-value assets such as artworks, real estate, and music copyrights into small units for multiple investors, with the traded asset being the securitized form—securities tokens (STO). Previously, fragmented investment mainly operated intermittently outside the formal regulatory system. To ensure investor protection and transaction security, financial regulators have been designing an official circulation market.

The two selected consortia will be able to operate the fragmented investment OTC exchange after completing the final licensing procedures with the Financial Committee later this year. The Committee’s policy limits licensing to a maximum of two companies; if a final decision is made by January 14, they can officially commence operations. This selection marks the first case within the regulatory framework allowing STO circulation, closely related to the future expansion of the digital asset market.

Market expectations suggest that with the participation of traditional financial institutions like Korean exchanges, the credibility of the STO market will be enhanced; meanwhile, private enterprises like Nextrade are expected to pursue differentiated strategies in specialized asset fields such as music copyrights. Notably, Musicow has accumulated significant experience and data in the music fragmentation investment platform, laying a foundation for accelerating physical asset digitization projects.

As institutional measures for fragmented investment are about to be formally established, this trend is likely to become an opportunity for the stable growth of blockchain-based digital asset circulation markets within the regulatory framework. From the perspectives of strengthening investor protection mechanisms, expanding asset liquidity, and fostering new industries, the STO market may also influence the long-term structural changes in the financial market.