Kakao Pay Securities Pursues U.S. Trading of Korean Stocks, Weighs Tokenized Shares

Targets U.S. launch of K-Stock platform in first half of next year

Seeks to remove trading-hour constraints and enable near real-time settlement

"Seibert is taking the lead in reviewing tokenized shares"

Kakao Pay Securities is reviewing a tokenized stock business with its U.S. partner, Seibert Financial, that would allow American investors to trade South Korean stocks 24 hours a day. Seibert would design the product structure and trading model in the U.S., while Kakao Pay Securities reviews whether the plan aligns with South Korean regulations.

Chief Executive Officer Shin Ho-cheol made the comments at a press briefing at the Conrad Seoul in Yeouido on July 23. He said tokenization is not a business Kakao Pay Securities is pursuing on its own, but one Seibert is considering as a strong option for enabling 24-hour trading. The company is examining how the collaboration could comply with domestic rules and is communicating with South Korea's financial authorities.

Kakao Pay Securities decided to push into the U.S. market as interest in Korean stocks has risen among local retail investors. Since last year, the company has seen more posts on U.S. online communities asking about Korean companies and how to invest in them, Shin said. He added that many investors interested in Korean firms have not moved on to actual investment because access channels and related information remain limited.

To target that demand, Kakao Pay Securities is building a K-Stock Global Gateway with Seibert. Seibert is a Nasdaq-listed brokerage in which Kakao Pay holds about a 20% stake. The two companies signed a strategic memorandum of understanding in the U.S. in May, and working-level teams have held weekly video meetings since then to discuss the service structure and cooperation plans. The platform is targeted for a U.S. launch in the first half of next year.

The Global Gateway is to include not only Korean stock brokerage functions through a U.S. securities firm, but also Kakao Pay Securities' investment content, user interface and user experience features, and investor community services. The plan is to offer U.S. investors more than trading functions by linking them to information that helps them better understand the business and value of Korean companies.

Stock tokenization is one option for extending the platform's trading hours. South Korea's stock market is closed during the hours when U.S. investors are typically most active, making real-time trading in Korean shares difficult. While U.S. exchanges are moving to extend trading hours, Korean stocks still face a mismatch with American investors' daily schedules.

Seibert has proposed tokenizing Korean stocks under the U.S. regulatory framework to enable 24-hour trading. Shin said debate over tokenized stocks and token securities is active in the U.S. and that the proposal appeared to be an effective way to address time constraints in trading Korean equities.

Seibert is expected to lead the business. Under that structure, it would design the product framework and trading methods for U.S. investors, while Kakao Pay Securities would link Korean stocks with investment content and review whether the structure complies with South Korean regulations.

Tokenized stocks have become a key topic in global financial markets because they allow 24-hour trading and can sharply reduce settlement times. Under the current system, it takes about three days after a trade for shares and cash to be finally settled. By contrast, a blockchain-based tokenized structure could allow investors to receive proceeds almost in real time after selling shares, Shin said.

There are risks as well. If 24-hour trading and real-time settlement become possible, faster capital flows could increase market volatility. Shin said concerns were also raised in discussions with U.S. market participants that tokenization could amplify volatility. He added that both the benefits and drawbacks of the technology-driven shift need to be assessed.

The timing of any tokenized stock launch will depend on regulations in South Korea and abroad. In the U.S., rules governing the issuance and trading of tokenized stocks, as well as investor protection, have not been finalized. South Korea also needs to determine how to treat tokenized structures for domestic stocks traded overseas. Shin said the company is continuing discussions with financial authorities, but it is difficult to give a specific timeline for adoption.