Hanwha Builds Tokenized Securities Platform on Avalanche Ahead of Korea's February 2027 Law

South Korea just moved from regulatory theory to live infrastructure. Hanwha Investment and Securities, one of the country's major brokerages, has reportedly completed a tokenized securities platform built on Avalanche and Hyperledger Besu, developed in partnership with blockchain technology firm FairSquare Lab since 2025. The timing is deliberate: South Korea's capital markets amendments that officially fold security tokens into the existing financial system take effect on 4 February 2027. For accounting firms, auditors, and CFOs with Korean market exposure, the question is no longer whether tokenized securities will arrive but what the accounting treatment looks like once they do, and how stablecoin settlement rails complicate the picture further.

What Hanwha Has Actually Built

According to a report by Seoul Economic Daily, Hanwha Investment and Securities began developing the platform in 2025 alongside FairSquare Lab. The platform was designed from the outset to run on multiple networks, with Avalanche and Hyperledger Besu as the primary environments. Hyperledger Besu is a permissioned Ethereum-compatible client often favoured in regulated financial deployments, while Avalanche's subnet architecture allows institutions to configure validator sets and compliance rules at the network layer.

Why the dual-network architecture matters for accounting

A platform spanning both a public blockchain subnet and a permissioned ledger creates a real classification challenge under IFRS. The asset being recorded on each network may be legally identical, yet the node governance, settlement finality rules, and counterparty exposure differ. Auditors will need to assess whether the ledger being used qualifies as the "primary record" under the incoming Korean amendments, and whether that status changes the derecognition point for the seller or the recognition point for the buyer.

Hanwha's wider blockchain strategy is not new. The Hanwha Group has built a 9.6% stake in Securitize across three affiliates, making it that firm's largest shareholder. In July, Hanwha Investment and Securities separately announced a 30 billion Korean won investment (approximately 22.3 million US dollars) in Canton Network operator Digital Asset. The tokenized securities platform is, therefore, one component of a sustained institutional commitment rather than a standalone experiment.

The Regulatory Context: February 2027 Is a Hard Date

South Korea has passed capital markets amendments that legally recognise distributed ledgers as securities registers. When those changes take effect on 4 February 2027, security tokens will be integrated into the existing capital markets framework rather than treated as a separate asset class operating outside it. That is a significant structural shift: it means the legal ownership of a tokenized security, for the first time in Korea, will be determined by the state of the on-chain ledger rather than a traditional central depository record.

The FSC's phased rollout and what it unlocks

The Financial Services Commission has outlined a phased implementation plan tied to the February effective date. In the initial phase, tokenization will be permitted for:

• Privately placed money market funds
• Bonds
• Unlisted stocks held through a trust wrapper
• Fractional investment securities

If the initial phase proves successful, the FSC intends to extend tokenization eligibility to publicly offered securities. The longer-term ambition is more consequential from an accounting perspective: the FSC wants to build onchain payment rails that allow investors to settle tokenized securities transactions using stablecoins. That final phase is where stablecoin accounting stops being a niche topic and becomes a mainstream capital markets issue for any firm operating in Korea.

For deeper context on how the FSC has framed these changes, see the FSC Korea's tokenization and stablecoin legislation roadmap and the detailed breakdown in South Korea's three-phase tokenized securities plan and its accounting implications.

IFRS Accounting Implications for Security Tokens

The classification of tokenized securities under IFRS is not settled globally, but the Korean legislative approach provides some useful anchors. Because the amendments integrate security tokens into the existing capital markets framework, the tokens are not a new asset class in law: they are existing securities in a new form. That framing has direct accounting consequences.

Classification under IFRS 9 and IFRS 32

A tokenized bond retains the contractual cash flow characteristics of a conventional bond. Under IFRS 9, the business model test and the solely payments of principal and interest (SPPI) test apply in the same way. If the token passes SPPI and is held in a hold-to-collect model, it sits at amortised cost. If it is held for trading or fails SPPI because of embedded blockchain-specific features such as programmable payment conditions, it falls into fair value through profit or loss.

For equity tokens, IFRS 32's distinction between a financial liability and an equity instrument applies. A tokenized unlisted stock held through a trust wrapper, as the FSC is initially permitting, requires a careful analysis of the trust structure: whether the wrapper creates a contractual obligation to deliver cash (a liability) or a residual interest in the underlying issuer (equity) will determine both the issuer's balance sheet classification and the holder's accounting treatment.

Derecognition and settlement finality

One of the more technically demanding questions is derecognition timing. Under IAS 39 and IFRS 9, a financial asset is derecognised when the contractual rights to its cash flows expire or the asset is transferred and the transfer qualifies for derecognition. In a conventional market, settlement in a central depository system provides a clear moment. On a blockchain, settlement finality depends on the consensus mechanism and the block confirmation rules of the specific network. On Avalanche, finality is reached in under two seconds in normal conditions. That is faster than T+2 conventional settlement. Accounting policies will need to specify the finality trigger that constitutes derecognition, and auditors will need to verify that the on-chain state at period end matches the financial statements.

Stablecoin Settlement: The Accounting Layer That Cannot Be Ignored

The FSC's stated ambition to introduce stablecoin payment rails for securities settlement is where stablecoin accounting and IFRS crypto assets guidance intersect most acutely. If a Korean institutional investor settles a tokenized bond purchase using a stablecoin, the accounting entry is not simply a swap of one cash-equivalent for a financial asset. The stablecoin itself requires classification.

Is the stablecoin cash, a cash equivalent, or something else?

Under current IFRS, there is no specific standard for crypto assets. IAS 7 defines cash equivalents as short-term, highly liquid investments readily convertible to known amounts of cash and subject to an insignificant risk of changes in value. A fiat-pegged stablecoin backed by high-quality liquid assets could, depending on its legal and contractual structure, meet that definition. However, the IASB has not issued a definitive ruling, and the IFRS Interpretations Committee's 2019 agenda decision on crypto assets treated them primarily as intangible assets under IAS 38, a treatment that most practitioners regard as unsuitable for stablecoins used as settlement instruments.

The practical consequence for a Korean securities settlement context is significant. If the stablecoin is treated as an intangible asset, every use in settlement generates a disposal event and potentially a gain or loss. If it is treated as a cash equivalent, settlement accounting is straightforward. Firms operating on the FSC's proposed stablecoin rails will need a documented, auditable policy position before they execute the first transaction, not after. It is also worth noting that the FASB has moved further than the IASB on this question: ASC 350-60 now requires fair value measurement for certain digital assets, and the FASB has separately proposed clarifying when a stablecoin qualifies as a cash equivalent under US GAAP. Neither ruling binds Korean IFRS preparers directly, but both provide useful comparative reference points when building a policy position.

Practical Steps for Accounting Firms and CFOs

With five months between now and February 2027, the preparation window is shorter than it appears. The FSC's initial phase covers privately placed instruments and trust-wrapped unlisted stocks: these are assets typically held by institutional investors and funds rather than retail participants, which means accounting firms servicing Korean asset managers, securities firms, and corporate treasuries need to act now.

Policy review and chart of accounts

The first practical step is reviewing existing digital asset accounting policies to confirm they cover tokenized securities explicitly. Many policies drafted in 2022 or 2023 were written around cryptocurrencies or simple utility tokens. They will not address the IFRS 9 classification cascade for a tokenized money market fund unit or the derecognition timing question for a blockchain-settled bond. The chart of accounts will also need new nominal codes that distinguish tokenized securities by classification category, separating amortised cost holdings from fair value through other comprehensive income positions and fair value through profit or loss positions.

Audit evidence and on-chain verification

Auditors will face a new evidence-gathering requirement. Confirming the existence and ownership of a tokenized security means querying the relevant blockchain at the balance sheet date, not relying solely on a counterparty confirmation. Firms should establish procedures for obtaining and retaining cryptographic proof of ownership, including the wallet address, the block height at period end, and the on-chain record of the issuer's ledger as recognised under the February 2027 amendments. Where the platform spans both Avalanche and Hyperledger Besu as Hanwha's does, the audit procedure must cover both environments.

Stablecoin settlement readiness

Even if the FSC's stablecoin payment rail ambition is a later phase, firms should draft a preliminary accounting policy position for stablecoin-settled transactions now. That position should address the classification question (cash equivalent, financial instrument, or intangible), the measurement basis at initial recognition and at period end, and the treatment of any differences between the stablecoin's par value and its market value at the settlement date. Having a defensible written position before the first transaction is completed is far easier than reconstructing one under audit scrutiny afterward.

Frequently Asked Questions

How should a tokenized Korean government bond be classified under IFRS 9?

The classification follows the standard IFRS 9 cascade: apply the business model test, then the SPPI test. If the token simply represents an on-chain record of a conventional bond with no embedded features that alter the cash flows, and the holder's model is hold-to-collect, amortised cost is the appropriate measurement basis. If the token includes programmable payment features that are not solely payments of principal and interest, fair value through profit or loss applies. The on-chain form does not, by itself, change the answer.

Does the February 2027 Korean law create a new IFRS standard?

No. The Korean capital markets amendments are domestic legislation recognising distributed ledgers as valid securities registers. They do not amend IFRS. IFRS preparers in Korea still apply IAS 32, IFRS 9, IAS 7, and IAS 38 as applicable. The legislation does, however, clarify the legal ownership framework, which informs the derecognition analysis under IFRS 9 by establishing when a transfer on the ledger constitutes a legal transfer of the asset.

What is the accounting treatment for a stablecoin used to settle a tokenized securities transaction under IFRS?

There is no IFRS-specific standard for stablecoins yet. The IFRS Interpretations Committee's 2019 agenda decision classified crypto assets primarily as intangibles under IAS 38, but that treatment is widely debated for settlement-grade stablecoins. A fiat-pegged stablecoin backed by qualifying liquid assets may meet the IAS 7 definition of a cash equivalent, but only if the entity can demonstrate convertibility to a known cash amount with insignificant value risk. Firms should document their policy position, referencing the contractual and legal structure of the specific stablecoin, before executing stablecoin-settled transactions.

How does Avalanche's fast finality affect derecognition timing under IFRS?

Avalanche achieves transaction finality in under two seconds under normal network conditions, which is considerably faster than conventional T+2 securities settlement. For derecognition purposes, the firm must define in its accounting policy the on-chain event that constitutes a completed transfer: typically, confirmed inclusion in a finalised block. Because finality on Avalanche is near-instantaneous, same-day derecognition for intraday transactions is technically supportable, provided the policy is documented and consistently applied.

Are firms outside Korea affected by Hanwha's platform or the FSC's amendments?

Directly, the amendments bind entities operating within Korea's capital markets framework. However, international asset managers holding Korean securities, custodians providing services to Korean brokerages, and multinational CFOs with Korean subsidiary exposure will all encounter the accounting questions described above as tokenized Korean securities appear in portfolios. The stablecoin settlement ambition is also relevant globally: any IFRS preparer receiving or delivering a stablecoin in settlement of a securities transaction faces the same classification question regardless of jurisdiction.

Source: The Block