Bithumb will be providing investment and technical support for the American security token exchange project.  Photo: AFP
The South Korean crypto exchange Bithumb is the focus of an ongoing police investigation. Photo: AFP

One of South Korea’s largest cryptocurrency exchanges has signed a deal with a US fintech company to set up a securities token exchange in America.

Bithumb, which according to handles $1.6 billion in daily trade volume, has made the agreement with SeriesOne, a crowdfunding portal “designed to liberate corporate finance from the big banks and corporate elites that have historically dominated the space.”

The Korean exchange will provide investment and technical support for the project in one of the world’s most regulated financial markets. According to local media, SeriesOne is pushing to establish a security token exchange in the US in the first half of next year.

Security tokens differ from regular cryptocurrencies in that they can pay dividends, share profits or interest and derive their value from an external tradable asset, and thus they are subject to federal security regulations. A crypto token that passes the Howey Test is deemed a security token; the test has been set up by the Supreme Court for determining whether certain transactions qualify as “investment contracts.”

Speaking to Korean media, a Bithumb representative said “SeriesOne actively sought to strike a deal with Bithumb after assessing it as the most suitable partner. Bithumb will ramp up efforts to develop into a global financial firm as blockchain-based asset tokenization is expected to spread globally down the road.”

SeriesOne is a US Securities and Exchange Commission-approved fintech firm established in 2013. In order to enter Asian markets the company has formed a subsidiary in South Korea and aims to issue security tokens. It traditionally works with real estate and media content, engaging in businesses including crowdfunding and blockchain.

The company also has ambitions to see its shares traded on the US stock exchange for unlisted companies this year before pushing for a NASDAQ listing in 2019.

Earlier this month it was announced that Bithumb had sold a majority stake to a Singapore based consortium. BK Global Consortium made the $350 million investment to gain a controlling share, and plans to launch a decentralized exchange based on the platform before the end of the year.

It is also likely that Bithumb will follow rival exchanges Binance and Upbit, which have both announced plans to open up in Singapore. The race to conquer the world for crypto exchanges has begun and those in South Korea are leading the pack at the moment.