Lee Hee-jin, Director of Kyobo Securities, presented a framework for institutional digital asset investment infrastructure at a National Assembly Members' Hall conference on May 23. Speaking at the 'Institutional Investor Era, A New Start for a Trusted Digital Asset Market' conference in Seoul's Yeongdeungpo District, Lee distinguished between corporate account opening as an 'access' issue and the institutional investor era as a 'trust' issue requiring comprehensive safeguards. Lee stated that Korea remains in an 'institutional transition period' rather than having entered the institutional investor era, with the Financial Services Commission currently discussing internal control standards, IT security requirements, and liability frameworks for institutional participation.
Lee Hee-jin Outlines Six Trust Pillars for Institutional Crypto Investment
Lee Hee-jin stated that institutional investors require six trust pillars before committing capital to digital assets. The first pillar is trust in the investment target, including clear legal classification, issuer identification, and sufficient liquidity. The second pillar is trust in investment decision-making processes, encompassing investment policies, limits, board approval procedures, and conflict-of-interest controls. The third pillar is trust in trading and pricing mechanisms, requiring fair price formation, market manipulation monitoring, and stable settlement systems.
The fourth pillar is trust in asset custody, mandating segregated customer asset storage, multi-signature approval systems, and clear asset return procedures in bankruptcy scenarios. The fifth pillar is trust in fund flows and compliance, including beneficial owner verification, Travel Rule implementation, and on-chain monitoring systems. The sixth pillar is trust in incident response, covering internal controls, insurance, liability frameworks, and business continuity plans. Lee stated: "If any one of these six is missing, institutions will not invest."
Kyobo Securities Proposes Five-Stage Roadmap for Institutional Market Development
Lee Hee-jin proposed a five-stage roadmap for Korea's institutional digital asset market development. The first stage is limited opening centered on listed corporations and professional investors. The second stage is establishing internal control standards and trading-custody separation. The third stage is building functional separation and interconnection systems among institutions. The fourth stage is expanding participation to ETFs and funds. The fifth stage is connecting traditional finance and digital asset markets through tokenized securities and stablecoins.
Lee stated the core principle as: "Allow in a limited manner, verify the effectiveness of controls, and expand gradually based on verified trust." Lee emphasized that trust infrastructure cannot be built by any single institution, requiring a multi-party ecosystem where institutional investors, exchanges, custodians, banks, securities firms, accounting firms, law firms, on-chain analytics providers, insurers, and supervisory authorities each perform designated roles and mutually verify one another.
Lee Hee-jin Details Internal Control and Custody Requirements
Lee Hee-jin specified that internal control institutionalization requires independent operation of investment approval, risk review, trade execution, trade approval, and asset custody. Lee stated: "The moment authority is concentrated in one person or one department, the risks of hacking, embezzlement, and insider threats increase." Lee called for separation of trading and custody functions, with exchanges handling transactions, custodians independently safeguarding assets, and banks managing funds.
Lee stated that institutional-grade custody is not merely private key storage but must encompass legal stability, operational controls, and external verification systems. Lee noted that domestic cases have begun obtaining global accounting firm SOC 1 Type 2 certifications, achieving global-standard internal controls. Lee also called for AML system advancement beyond basic KYC to include transaction flow analysis (KYT) and wallet risk assessment (KYW) for institutional markets.
FAQ
What did Lee Hee-jin present at the National Assembly conference on May 23?
Lee Hee-jin, Director of Kyobo Securities, presented a framework titled 'Building Trust Infrastructure for Digital Assets in the Institutional Investor Era' at the 'Institutional Investor Era, A New Start for a Trusted Digital Asset Market' conference held at the National Assembly Members' Hall in Seoul's Yeongdeungpo District on May 23. Lee distinguished between corporate account opening as an 'access' issue and the institutional investor era as a 'trust' issue requiring six trust pillars and a five-stage development roadmap.
What are the six trust pillars Lee Hee-jin identified for institutional crypto investment?
Lee Hee-jin identified six trust pillars: (1) trust in investment targets (legal clarity, issuer identification, liquidity), (2) trust in investment decision-making (policies, limits, board approval, conflict controls), (3) trust in trading and pricing (fair price formation, manipulation monitoring, stable settlement), (4) trust in custody (segregated storage, multi-signature systems, bankruptcy procedures), (5) trust in fund flows and compliance (beneficial owner verification, Travel Rule, on-chain monitoring), and (6) trust in incident response (internal controls, insurance, liability, business continuity). Lee stated that institutions will not invest if any one pillar is missing.
What five-stage roadmap did Kyobo Securities propose for Korea's institutional digital asset market?
Lee Hee-jin proposed a five-stage roadmap: (1) limited opening for listed corporations and professional investors, (2) establishing internal control standards and trading-custody separation, (3) building functional separation and inter-institutional connectivity, (4) expanding participation to ETFs and funds, and (5) connecting traditional finance and digital assets through tokenized securities and stablecoins. Lee stated the core principle as allowing in a limited manner, verifying control effectiveness, and expanding gradually based on verified trust.
