Attention is turning to the rationale behind Kakao Pay Securities' partnership as the firm launches a Korean stock tokenization business using U.S. mid-sized brokerage Siebert Financial as its base.
According to the financial industry on the 25th, Siebert Financial's market capitalization stood at $67.55 million as of the 22nd local time, roughly 1/1400 the size of the $94.008 billion market cap of Robinhood, the U.S. online stock trading platform. Siebert is a brokerage that is not well known to domestic investors and is relatively small in scale. Industry analysts say that because Kakao Pay already holds a stake in the local brokerage, the arrangement is a more efficient choice than building a separate overseas base.
The relationship between Kakao Pay and Siebert began in 2023. At the time, Kakao Pay spent about $17 million to acquire 8,075,607 Siebert shares, or 19.95%. The two companies have since expanded the scope of their cooperation, centered on overseas stock brokerage and digital finance infrastructure.
In August last year, Siebert executives visited Korea to discuss cooperation plans with Kakao Pay and Kakao Pay Securities executives across platforms, technology, and digital finance as a whole. At the time, Kakao Pay Securities also announced plans to broaden the scope of cooperation into a forward base for tapping overseas markets by leveraging Siebert's global network and financial infrastructure.
The Korean stock tokenization business is interpreted as an extension of this cooperation. Kakao Pay Securities is pursuing a plan to offer tokenized products based on Korean stocks to local investors by leveraging Siebert's U.S. brokerage business base. Instead of establishing a separate entity or securing a new local operator, the strategy is to reduce the time and cost of market entry by leveraging the existing equity relationship and financial infrastructure. Another advantage cited is that it allows the company to gauge U.S. investors' demand for tokenized Korean stock products and verify their marketability.
The tokenization business is difficult to pursue with blockchain technology alone. It requires securing local licensing, securities distribution structures, clearing and settlement systems, and investor accessibility together. In particular, in a market such as the United States, where state and federal regulations are complex, analysts say cooperation with a local financial firm that already has an operating base can enhance the ability to execute the business. The fact that the U.S. Securities and Exchange Commission (SEC) is accelerating the maintenance of related rules and the Depository Trust & Clearing Corporation (DTCC) is also pursuing tokenization services, with market foundations being laid rapidly, is cited as another reason for choosing the U.S. as a base.
Tiger Research, a Web3-focused research firm, analyzed in its report "RWA Tokenization: Start Abroad First," published this month, that "for a company that already holds an overseas base, it is efficient to review that jurisdiction first." The firm explained that a strategy of first issuing tokenized products in a country with established regulations to secure a business reference and prove results can be advantageous. Tiger Research added that because the tokenization market is inherently a global business, accumulating operating experience across various regulatory environments can lead to competitiveness.
