Axelar: The Multichain Transition of the Korean STO Market and Cross-Chain Infrastructure
1. Why Korean STOs Are Moving to Multiple Chains
1.1 The Implementation Timeline and Subordinate Regulations
The amended Electronic Securities Act and Financial Investment Services and Capital Markets Act (Capital Markets Act), which introduce security tokens, passed the National Assembly in January 2026, were promulgated on February 3, and take effect on February 4, 2027 after a one-year grace period. If the effective date marks the formal start of the regime, the publication of subordinate regulations is the practical benchmark for building infrastructure and designing products. On October 1, 2026, the FSC pre-announced amendments to the enforcement decrees of the Capital Markets Act and the Electronic Securities Act, the Regulations on Financial Investment Business, the Regulations on Securities Issuance and Disclosure, and the Regulations on Electronic Registration. The comment period runs from October 2 to November 11, and the effective date remains February 4, 2027.
The enforcement decrees and guidelines give concrete shape to actual business structures, including eligible underlying assets, operating scope, and investor protection requirements. Key issues include investor trading limits, the permitted scope of pooling, where tokens are issued against a bundle of the same type of underlying asset, and standards for valuing and disclosing underlying assets. The draft sets a trading limit for retail investors of KRW 100 million in annual net purchases per over-the-counter exchange, and requires that distributed ledger participants include at least two account management institutions in addition to the electronic registration agency. As the comment period is still under way, the final rules may change during the approval process.
1.2 From Fractional Investment to Standardized Securities
Korea’s regulatory discussion began with investment contract securities and non-monetary trust beneficiary certificates backed by unstructured assets such as artworks and real estate. More recently, it has expanded to tokenizing established standardized securities such as stocks, bonds, and MMFs. The FSC’s security token policy direction, announced in September 2026, follows this trend. It sets out a phased structure that starts in February 2027 with standardized products such as private MMFs for institutional investors and corporate bonds, widens to publicly offered securities, and then moves to on-chain settlement linked to digital means of payment such as stablecoins. Timing beyond the second phase may depend on the stability of the first phase, technical progress, and stablecoin legislation, so infrastructure should be designed with phased expansion in mind rather than a fixed schedule.
As real estate fractional investment platforms such as Funble and Kasa Korea moved to wind down their services, questions about the business viability and liquidity of this market came to the fore. Meanwhile, bonds, MMFs, and stocks emerged as the center of the discussion. Professor Lim Byung-hwa of Sungkyunkwan University has also noted that the global tokenization market is growing around standardized financial assets such as bonds, MMFs, and stocks, and suggested that Korea’s infrastructure should first be upgraded for assets with clear pricing.
The implications for infrastructure are clear. Tokenizing a single artwork requires the flexibility to accommodate rights structures that differ from asset to asset. Stocks, bonds, and MMFs, by contrast, already trade on internationally accepted standards, so tokenizing them requires high-volume issuance, access to external liquidity, and standardized settlement. Korea’s STO infrastructure began with the former in mind and now faces the demands of the latter.
BlackRock’s tokenized MMF, BUIDL, launched on Ethereum and expanded to multiple networks including Solana and Polygon, growing into a leading institutional tokenized product. The case shows that institutional tokenized assets can also expand to the networks where demand and liquidity exist.
1.3 Koscom and Securities Firms Take Different Infrastructure Paths
Koscom is building KoSTO, a joint STO platform based on Hyperledger Fabric, with securities firms including Kyobo Securities, Daol Investment & Securities, and Woori Investment & Securities. Hyundai Motor Securities joined in September 2026, bringing the number of participating firms to 13, and Koscom has completed issuance infrastructure work with LG CNS and a test-bed trial of the KSD’s total-volume management. With participants and core infrastructure in place, the next question for the joint platform, due to be unveiled in November, is how it will connect to external networks. Kim Wan-sung, head of Koscom’s digital asset business division, explained that Koscom adopted Hyperledger Fabric because government guidance presupposed private blockchains, and that it is pursuing multichain support in light of the constraints on expanding to public blockchains.
Private distributed ledgers make it easier to control participants and data access, and relatively easier to build regulatory requirements into system design. They are not connected to external networks by default, however, so using assets and liquidity on public blockchains requires a separate gateway and permission management framework. Koscom’s steps in June 2026 respond to this constraint: following the introduction of a system for standardized securities, it announced multichain support, held meetings with Canton, an institutional blockchain, and Solana, a public blockchain, and included Base, an Ethereum Layer 2, in its review.
Meanwhile, once the amended Electronic Securities Act takes effect, issuers that meet certain requirements will be able to register rights directly on a distributed ledger as issuer account management institutions. In preparation, large securities firms are pursuing their own infrastructure alongside the joint platform. Korea Investment & Securities has issued an RFP for an integrated issuance platform covering bonds and MMFs, and Samsung Securities is also considering its own platform.
Approaches are not limited to in-house builds. Mirae Asset Securities has built its own STO mainnet and separately unveiled an integrated platform, MAPS. KB Securities is developing Canton Network-based infrastructure with the Canton Foundation and Wavebridge, and Shinhan Securities is upgrading its distributed ledger infrastructure through the PULSE project. Work with public blockchains has also emerged. KB Securities signed an MoU with Securitize and the Optimism Foundation in September 2026, and Meritz Securities signed one with the Optimism Foundation in October, each to explore security token infrastructure on Ethereum Layer 2. However, the technical architecture of each platform and how it links to the KSD remain largely undisclosed, and alignment with Korean rules, such as the principle that each security be issued and traded on a single ledger, is still to be confirmed.
With the regulatory direction not yet settled, some firms may choose to keep several options open at once. If a securities firm that has built its own platform later also uses Koscom’s infrastructure, a structure in which a single firm uses two or more distributed ledgers may emerge.
2. Four Challenges Created by the Shift to Multiple Chains
When securities firms and platforms adopt different distributed ledgers, multiple issuance infrastructures will coexist in the market. Even if the same security never moves between ledgers, trading terms and processing status may still need to be linked between a security ledger and a payment ledger. It is therefore necessary to distinguish settlement and operational links between ledgers, which are relevant today, from the movement of the same security between ledgers, which may become relevant depending on future regulatory change. On that basis, we look at four challenges for interoperability infrastructure.
2.1 Scaling Connections Between Ledgers
The KSD’s direct node participation model, analyzed in our earlier piece “Recommendations for the Globalization of Korea’s STO Market,” has the KSD join each issuer’s distributed ledger as a node and synchronize data directly. The target technologies named in the request for proposals alone included Hyperledger Besu, Hyperledger Fabric, and Klaytn (now Kaia).
When multiple distributed ledgers are introduced, two different kinds of connection burden arise. The KSD faces the operational burden of joining each issuance ledger to verify total volume, while issuers and operators face the development burden of integrating the payment ledgers or external networks they need. In the latter case, each connection target has its own consensus mechanism, data standards, and update cycle, requiring separate development, security review, and maintenance. The benefit of a common interoperability layer should be assessed against the cost of building and running these external connections.
With a common infrastructure layer, a standardized integration process can be applied instead of rebuilding the entire connection structure for each chain. Connecting a new chain still requires smart contract deployment, security review, chain-specific finality thresholds, and verification of the permission framework.
2.2 Keeping Total Supply Consistent Across Ledgers
The amended Electronic Securities Act allows distributed ledgers that meet certain requirements to be used as electronic registration account books, laying the groundwork for giving legal effect to securities rights recorded on a distributed ledger. It also has the KSD, as the total-volume management institution, compare and manage issued amounts against the quantities allocated to investors.
The security token test-bed model presented by the KSD assumes a one-to-one link between security data on the distributed ledger and the total-volume management system to confirm issued and outstanding amounts. This structure raises two competing considerations. Running a distributed ledger alongside the existing total-volume management system can duplicate costs and operational burden. Skipping issuance verification, on the other hand, makes it difficult to manage mismatched rights records and the risk of over-issuance.
Across the market, this burden grows as the number of issuers and distributed ledgers increases. However, the standard requirements guideline for security token distributed ledgers that the KSD published in September 2026 requires each security to be issued and traded on only one distributed ledger, and prohibits moving it to another ledger after issuance. Korea’s initial regime, in other words, does not allow a single security to circulate across multiple ledgers.
The challenge under the initial regime is therefore for the KSD to consistently verify each security’s total issued amount and the quantities allocated to investors in an environment where different securities are issued and traded on their own ledgers. As the number of issuance ledgers grows, managing the operational burden of data collection, reconciliation, and exception handling becomes more important.
If moving the same security between ledgers is permitted in the future, controlling duplicate issuance and over-circulation during transfers becomes an additional challenge. In that case, interoperability infrastructure can provide technical controls that link locking with minting and burning with unlocking. For the KSD to verify this independently, it would need access to lock, mint, burn, and unlock records on each ledger and to the status of in-flight transactions. The DAMA 2 case in Section 3 is examined as an institutional design reference for this expanded scenario.
2.3 Simultaneous Settlement of Assets and Payment
Korean equity trades currently follow a T+2 structure, completing settlement two business days after the trade date through trade confirmation, clearing, delivery of securities, and payment. When tokenized assets and the means of payment sit on the same programmable ledger, it becomes easier to bind the two transfers into a single execution condition. Placing them on the same ledger, however, does not by itself resolve legal settlement finality, liquidity, or operational procedures.
Binding an asset transfer and a payment into a single condition so that both execute or neither does is called atomic settlement. Atomicity and settlement finality are distinct, however: settlement finality means an executed transaction is confirmed as irreversible. Implementing delivery versus payment (DvP) across different distributed ledgers requires considering not only the execution conditions on both sides but also each ledger’s finality criteria.
Settlement structures using digital means of payment are also being explored in Korea. In July 2025, Koscom announced a proof of concept for a security token settlement system using stablecoins. The work tests whether stablecoins can serve as the means of payment during subscription and secondary trading, with asset transfer and payment completed together.
In its September 2026 security token policy direction, the FSC also stated that interoperability technology is needed to link different distributed ledgers, such as security-token ledgers and stablecoin ledgers. It intends to keep its options open, including links through bridge solutions and technical links between mainnets. Although it did not designate a specific technology or provider, settlement links between ledgers have become a formal policy agenda.
There is no guarantee that security tokens and digital means of payment such as stablecoins will sit on the same distributed ledger. If they sit on different ledgers, cross-chain DvP becomes a central design challenge. Implementing DvP across ledgers requires designing the final confirmation of security delivery and payment so that each is conditional on the other. If the conditions are not met, the system must be able to withhold confirmation and process cancellation and unlocking. Compensating procedures for incident response may also be needed, but these should be evaluated separately from DvP settlement conditions. Beyond message passing between ledgers, both ledgers’ finality criteria and failure-handling procedures must therefore be verified together.
2.4 Consistent Policy and Institutional Authority
The fourth challenge is policy enforcement. Requirements such as investor eligibility checks, transfer restrictions, and blocking sanctioned addresses should apply identically regardless of which distributed ledger holds the asset. Defining and updating policies separately for each ledger leaves both administrative burden and the risk of inconsistency between policies. How policy changes are reflected simultaneously across multiple ledgers must also be designed.
Permission management must be designed as well. When a security ledger and a payment ledger are connected, it must be clear who approves and restricts transactions on each ledger and who decides how incidents are handled. Required control functions such as freezing, forced recovery, and burning should be implemented according to each asset’s legal basis, token design, and the operator’s authority. If moving the same security between ledgers is permitted in the future, it will need to be further verified that the necessary control authority can be exercised on the destination ledger. Whether supervisors can independently check the state of the relevant ledgers and the record of authority exercised is another important requirement.
3. Interoperability in Practice: Axelar in Institutional Deployments
To see how the four challenges above have been handled in institutional settings, we look at two overseas institutional cases and one Korean technical validation that used Axelar.
3.1 DAMA 2: On-Chain Supply and Institutional Control Across Multiple Ledgers
In June 2025, Deutsche Bank published the litepaper for DAMA 2, its asset tokenization platform. The document was co-authored by Deutsche Bank, Memento Blockchain, and Interop Labs, the developer of the Axelar network. The litepaper identifies the fragmentation of liquidity and products across blockchains, and regulatory uncertainty between public and private chains, as key problems to solve. Similar issues around connecting private distributed ledgers and public blockchains are emerging in Korea. DAMA 2, however, is a design at the litepaper stage rather than a commercial service, and is better seen as a design reference proposed by an overseas institution for handling multiple ledgers than as a model that applies to Korea as is.
DAMA 2 designates the reference ledger for an asset as its home chain and mints tokens on distribution chains only up to the amount locked on the home chain. A Token Manager handling locking and unlocking sits on the home chain, and a Token Manager handling minting and burning sits on each distribution chain. When an asset moves between chains, locking is linked with minting and burning with unlocking, so that the same asset does not circulate twice. When checking total supply, the original locked on the home chain and the tokens minted on distribution chains must not be double-counted, and in-flight transactions, where minting or unlocking has not yet completed after locking or burning, must also be tracked.
Axelar’s Interchain Token Service (ITS) allows tokens deployed on multiple chains to be recognized as a single asset and used as the same asset across chains. Permissions such as locking and unlocking, minting and burning, and freezing are exercised through separate Token Managers. This structure addresses the total-supply consistency challenge described in Section 2.2.
This structure, however, holds only on the premise that each ledger’s token contracts and message verification systems work correctly and that minting and burning permissions are properly controlled.
The permission structure is designed as well. The litepaper proposes that a third-party custodian such as Deutsche Bank Securities Services could manage Token Managers across multiple distributed ledgers. It also proposes that each token contract reference rule contracts at the gateway to apply policies such as blocking sanctioned addresses. This allows institutions to retain control while reducing the burden of re-implementing the same policies on each ledger, addressing the policy consistency challenge in Section 2.4.
On connection scalability, DAMA 2 proposes a hub-and-spoke structure that extends to EVM and non-EVM blockchains through a single access point connected to the Axelar network.
3.2 Kinexys and Apollo: Linking Instructions and State Across Ledgers
In November 2023, as part of Project Guardian led by the Monetary Authority of Singapore (MAS), J.P. Morgan’s Onyx (now Kinexys) and Apollo carried out a cross-chain portfolio management proof of concept. Multiple blockchains and technology providers took part, and Oasis Pro handled the tokenization of the Apollo fund. Here we focus on the path in which Axelar was used to connect Onyx and Provenance Blockchain. Onyx is EVM-based, while Provenance Blockchain Zone is a permissioned network where Apollo’s tokenized fund was deployed, so the setup connected two distributed ledgers of different kinds.
The proof of concept examined whether interoperability infrastructure could resolve the fragmentation of liquidity and user experience that arises when tokenized assets are spread across different EVM and non-EVM ledgers.
When a portfolio manager instructed a rebalancing to swap one fund for another, the rebalancing module automatically adjusted multiple portfolios following the same strategy, including order execution and settlement. The proof of concept showed that portfolio adjustments under a single investment strategy can be automated even when asset types or underlying ledgers differ.
On this path, Axelar provided cross-chain interoperability between Onyx and the permissioned Provenance Blockchain.
3.3 A Korean Case: Won Stablecoin Technical Validation
Axelar has also been involved in a validation case in Korea. In April 2026, Axelar announced that it had completed a technical proof of concept for a Korean won stablecoin together with XRPL Korea and Hana Financial TI. According to press reports, the validation examined won stablecoin issuance and supply management, as well as the structure for moving and settling assets between different blockchains. Control functions required by financial institutions, such as restricting or recovering transactions in specific assets and adjusting circulating supply in abnormal situations, were also tested. Axelar handled asset movement and settlement between blockchains, while XRPL was assessed for issuance and operational controls.
The significance of this case is that it examined the cross-chain movement and settlement of a digital means of payment in a Korean institutional setting.
4. Conditions to Examine in the Korean Market
4.1 How the KSD Verifies
The KSD guideline requires at least three independent institutions to take part in consensus and validation on a distributed ledger, with the KSD participating directly as a total-volume management node. As the number of ledgers grows, whether this direct-participation approach can keep up becomes a challenge. Applying supply-preserving logic such as locking, minting, burning, and unlocking to transfers between ledgers can reduce the risk of mismatches during transfers and the burden of after-the-fact reconciliation.
4.2 What Securities Firms Should Weigh When Choosing Infrastructure
The RFPs securities firms are issuing now will set the basic structure of the issuance and management infrastructure each firm uses for years to come. What matters more than the number of supported chains is how integration costs grow as chains are added. Point-to-point connections and a common interoperability layer incur costs at different points, so initial build costs, costs of adding chains, and long-term maintenance costs should be compared separately. Multichain support on a joint platform should likewise be judged not by the number of chains but by whether it can preserve on-chain supply, link settlement, and enforce policy consistently as assets move between chains.
4.3 Common Ground Between Regulation and Due Diligence
Fractional investment businesses currently operate mainly within the existing electronic securities structure and the innovative financial services framework. The KSD guideline prohibits creating or trading virtual assets for fees or seigniorage in the electronic registration process, and the industry reads this requirement as making it difficult to use public blockchains directly as security token account books. Even as Koscom pursues its standardized securities system and multichain plans, a regulatory basis must come first before they can be put into practice. Koscom CEO Yoon Chang-hyun explained that under a positive regulatory system, the authorities must first set out clear rules and supervisory frameworks for the market to move.
The requirements that subordinate regulations must set and the due diligence items individual institutions must check when adopting interoperability infrastructure meet on total-supply verification, institutional authority, and auditability. Subordinate regulations should set minimum standards and principles of responsibility for these. On that basis, individual institutions should conduct due diligence on message verification methods, recovery procedures, dependency on a specific protocol, and the ability to switch to other infrastructure.
Conclusion
As the likelihood of multiple issuance infrastructures coexisting in Korea’s STO market grows, how to connect different distributed ledgers is becoming an important design question. The purpose of connection, however, must be distinguished. The KSD guideline discussed above restricts moving the same security between ledgers, while the FSC has set settlement links between security-token and stablecoin ledgers as a policy agenda. At this stage, the priority area for reviewing interoperability infrastructure is therefore connecting securities and means of payment that sit on different ledgers.
Axelar’s institutional deployments offer reference points for examining such connection structures. DAMA 2 proposed a design for managing total supply and institutional authority across multiple ledgers, and the Kinexys and Apollo proof of concept showed the potential for operational links across different ledgers. The Korean won stablecoin validation also examined the cross-chain movement and settlement of a means of payment. Because each case differs in design and scope of validation, applying them to Korean STOs will require further verification of simultaneous settlement of securities and payment, enforcement of institutional authority, and transaction handling in the event of failure.
In this light, Axelar can be considered a candidate connection layer for settlement and operational links between ledgers in Korea’s STO market. The first step is to check whether it meets Korean regulatory and institutional operating requirements for specific transactions in which security tokens and digital means of payment sit on different ledgers. If moving the same security between ledgers is permitted in the future, the scope of that verification can expand to supply preservation and broader distribution. Axelar’s applicability in Korea should be judged through this process of verifying, in actual transaction structures, the functions required at each stage.
※ This article is based on publicly available information as of October 2026. Content on subordinate regulations reflects the pre-announced drafts.
Key Source
Government and Public Sources
Korea Law Information Center - Act on Electronic Registration of Stocks, Bonds, etc. (in Korean)
Bank of Korea - Payment and Settlement Systems in Korea: Securities Settlement Systems (in Korean)
Korean Market Trends and Research
Catalyze Research (2026) - Recommendations for the Globalization of Korea's STO Market
Herald Economy (2026) - Axelar Completes Won Stablecoin Technical Validation (in Korean)
Overseas Institutional Cases
J.P. Morgan Kinexys - Portfolio Management Powered by Tokenization
Axelar (2023) - J.P. Morgan & Apollo Deliver 'Project Guardian' With Help from Axelar & Others
Securitize (2025) - BlackRock and Securitize Debut New BUIDL Share Class on Solana Network
Technical Documentation
Axelar Docs - Interchain Token Service
Axelar Docs - General Message Passing
Disclaimer
The contents of this report are for informational purposes only and do not constitute a recommendation or basis for legal, business, investment, or tax advice under any circumstances. References to specific assets or securities are for informational purposes only and do not represent an offer, solicitation, or recommendation to invest. The final responsibility for any investment decisions lies solely with the investor, and this report should not be used as a guideline for accounting or legal judgment.
As a matter of principle, the author does not trade related assets using material non-public information obtained during the research or drafting process. The author and Catalyze may have financial interests in the assets or tokens discussed herein and may serve as a strategic partner to certain networks.
The opinions and analyses expressed in this report reflect the author’s personal views and do not necessarily represent the official position of Catalyze or its affiliates. All information is current as of the date of publication and is subject to change without prior notice.