<p>Seoul Auction Blue, the operator of fractional artwork investment platform Sotwo, recently submitted an application to the South Korean Financial Supervisory Service (FSS), local news outlet Seoul Economic Daily <a href="https://www.sedaily.com/NewsView/29XET5UIDP?OutLink&#61;telegram" rel="noopener noreferrer nofollow">reported</a> on Wednesday (local time). Its aim is to register security tokens linked to artworks with the financial authority, marking it the third entity in the country to pursue this innovative financial venture.</p><h2 id="header-0">Andy Warhol’s ‘Dollar Sign’</h2><p>The artwork investment app plans to issue security tokens based on Andy Warhol’s “Dollar Sign,” a piece measuring 51.0 cm in height and 40.5 cm in length. This artwork was purchased by Seoul Auction Blue at an auction for KRW 626.2 million (approximately $485,000). The total value of the security tokens, inclusive of issuance costs, is approximately KRW 700 million. The firm will issue a total of 7,000 tokens, each valued at KRW 100,000. Upon receiving regulatory approval, Seoul Auction Blue is set to open for subscription requests from Dec. 20 to 26.</p><p>In its endeavor to issue digital investment contract securities, Seoul Auction Blue has meticulously prepared its documentation in line with the FSS’s guidelines. The selection of the artwork of Andy Warhol, the renowned and iconic 20th-century artist, aligns with the FSS’s recommendation to choose a significant piece by an internationally acclaimed artist. This strategic choice reflects the company’s commitment to compliance and the recognition of Warhol’s global stature in the art world.</p><h2 id="header-1">Preventing conflicts of interest</h2><p>The registration application submitted by Seoul Auction Blue includes specific restrictions aimed at preventing conflicts of interest with its affiliates related to security tokens. As per these rules, the company is barred from buying idle assets of affiliates to back its security tokens. Instead, Seoul Auction Blue is permitted to acquire them only through public methods like participating in an open bid or a post-sale bid process. Notably, the token issuer is in principle prohibited from purchasing these assets via intermediaries in private sales or any other non-transparent settings.</p><p>The acquisition of underlying assets requires approval from the compliance monitoring committee. Furthermore, this regulation strips Seoul Auction Blue of the capacity to determine the final trading prices or conditions for these transactions.</p><p>In addition, the company is collaborating with a couple of securities firms to safeguard investors’ funds, creating a buffer against any potential bankruptcy of the issuer. The funds raised from subscriptions for the security tokens will be managed in accounts overseen by KB Securities. Additionally, an investor protection fund is being set up, which will be handled as a trust fund by Shinhan Securities. This fund acts as an extra layer of security, offering investors enhanced protection for their investments.</p>

Seoul Auction Blue seeks to register security tokens with the FSS for Andy Warhol’s artwork

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