Lucentblock: "STO Licensing Process Unfair... Calls for Reassessment"

Financial Services Commission to Review Preliminary Licenses for Exchange and NXT on the 14th
Controversy as Both Entities Lack Track Record in STO Distribution
Lucentblock Claims "Purpose of Protecting Innovative Companies Undermined"

"This is a market pioneered by innovative companies that have taken on significant risks. However, institutions with no experience in distributing security tokens (STO) have been given higher evaluations than operators who have run platforms for four years."

Lucentblock, which has been operating a domestic STO platform, has called for a reassessment, claiming that the licensing process for fractional investment over-the-counter (OTC) exchanges by financial authorities is being conducted unfairly. The company argues that innovative firms that pioneered the market through the regulatory sandbox are being excluded during the institutionalization process.

On the morning of January 12, at a press conference held at MARU180 in Gangnam-gu, Seoul, Lucentblock CEO Heo Seyoung stated, "This is an example of administrative processes and market restructuring centered on vested interests during the institutionalization process," adding, "There are attempts to drive Lucentblock out of the market."

The Financial Services Commission is scheduled to review preliminary licensing for fractional investment OTC exchanges involving the 'Korea Exchange-Koscom (KDX Consortium)' and 'Nextrade-Musicow (NXT Consortium)' at its regular meeting on January 14. The 'Soyu' consortium led by Lucentblock is reportedly set to be eliminated. Previously, the Financial Services Commission announced that it would grant licenses to up to two companies.

Lucentblock pointed out that the current licensing process runs counter to the intent of the 'Special Act on Financial Innovation Support.' The law provides safeguards to ensure that the achievements of businesses that led innovation through the regulatory sandbox are not imitated or encroached upon during institutionalization. However, Lucentblock claims that such protections are not functioning in practice.

CEO Heo said, "The fundamental intent of the Special Act on Financial Innovation Support is being undermined in the field," adding, "This is a representative case that directly contradicts both the spirit of the special law aimed at protecting and fostering innovative startups and the legislative intent of the National Assembly."

Previously, the Financial Services Commission announced that the current round of STO OTC exchange licensing was a process to institutionalize pilot services operated under the regulatory sandbox. However, Lucentblock countered that the process is not institutionalizing the continuity of existing operators, but rather proceeding as a new competitive licensing scheme.

Additionally, Lucentblock pointed out that, in the case of the KDX Consortium led by the exchange, it received high marks in business plan, technological capability, and stability assessments, despite having no real track record in STO distribution. According to Lucentblock, although the Korea Exchange was allowed to operate an STO on-exchange market for two years through the regulatory sandbox, it achieved zero actual distribution results.

CEO Heo emphasized, "Institutions with no experience in STO distribution received higher evaluations than operators who have run platforms for four years and served 500,000 users," adding, "This seriously undermines the fairness of the review, as it demonstrates that more value was placed on 'paper plans and institutional reputation' submitted by large organizations than on years of accumulated empirical data."

Regarding Nextrade, Lucentblock also raised concerns about fair competition. Lucentblock claims that, prior to Nextrade's license application, a non-disclosure agreement (NDA) was signed under the pretext of investment and consortium participation review, and that financial information, business plans, and core technology materials were provided. The company explained that controversy erupted when Nextrade applied for the same STO distribution business license within a short period, without any further cooperation.

Lucentblock particularly emphasized that this issue is not a case of 'failure to enter a new business,' but rather a case where an existing business is at risk of being halted during the institutionalization process. CEO Heo lamented, "If the structure in which markets pioneered by innovative companies at their own risk are transferred to other parties without sufficient protection is repeated, it could have a negative impact on the entire domestic innovation ecosystem." He further appealed, "We urge a reassessment of this matter in line with the original intent of the system."

Since its establishment in 2018, Lucentblock has been designated as an innovative financial service provider by the Financial Services Commission and has operated the STO service 'Soyu.' To date, the company has served approximately 500,000 users and recorded cumulative asset issuance and distribution results totaling 30 billion won, thereby providing empirical evidence for the STO market.