"For Korea to become a trusted on-chain financial hub, clarifying the regulatory framework for won stablecoins is the top priority. Rules covering issuance, redemption and custody need to be in place so that banks can build commercial systems with confidence."
Sergey Nazarov, co-founder of Chainlink and CEO of Chainlink Labs, said in a recent interview that Korea must first resolve institutional uncertainty if it wants to grow into Asia's on-chain financial center.
Chainlink started as a decentralized oracle network that feeds off-chain price data onto the blockchain. It has since expanded into institutional on-chain financial infrastructure, adding a Cross-Chain Interoperability Protocol (CCIP), a Chainlink Runtime Environment (CRE) and an Automated Compliance Engine (ACE) that together support cross-chain transactions, financial workflow automation and regulatory compliance.
Nazarov said the expansion reflects years of oracle technology reliably delivering data on-chain and proving its trustworthiness. He attended the signing ceremony for the GENIUS Act at the White House last July and was appointed in February to the Innovation Advisory Committee of the US Commodity Futures Trading Commission (CFTC), where he advises on the impact of emerging technologies such as blockchain on commodity markets and their regulation.
Can Project Pangea strengthen the won's place in on-chain FX markets?
Nazarov identified three strengths that set Korea apart: a large and active retail digital-asset investor base, rapid technology adoption by the banking sector, and ongoing policy discussions around won stablecoin adoption.
"Most markets have one or two of these conditions," he said. "It is rare to find all three together the way Korea does."
However, he said financial institutions will need a clear licensing framework — one that defines the scope of permitted activities and lines of accountability — before they can move beyond pilots to build real services. He pointed to the US GENIUS Act, the EU's Markets in Crypto-Assets (MiCA) regulation, and the licensing regimes in Singapore and Japan as potential references.
"Korea can draw on frameworks that have already proven effective abroad and adapt them to the won's unique role in global trade and capital flows," Nazarov said.
He paid particular attention to Project Pangea — a joint initiative involving Korean and European financial institutions — as a vehicle through which the won could strengthen its position in the global on-chain foreign exchange market.
Project Pangea brings together UniKA, a consortium of Korean banks including Shinhan Bank, Woori Bank, K bank and Jeonbuk Bank, and Qivalis, a coalition of 37 European banks, to research and validate a real-time FX settlement system using won and euro stablecoins.
The global FX market, where daily trading volume reaches $9.6 trillion, typically settles on a T+2 basis — two business days after a trade is executed. That gap forces financial institutions to carry counterparty credit risk and settlement-failure risk while funds are in transit.
Project Pangea aims to compress that window to same-day settlement, or T+0. Exchanges between won and euro stablecoins would use a payment-versus-payment (PvP) mechanism, under which the entire transaction fails if either leg of the transfer does not go through.
The project is also designed to work with existing banking infrastructure. It uses the ISO 20022 international financial messaging standard and the SWIFT network without modification. Chainlink's CRE converts SWIFT messages into blockchain-executable transaction instructions, while CCIP moves euro stablecoins onto the blockchain where won settlement takes place, and data streams deliver FX market data in under one second.
"Combining blockchain networks with oracle infrastructure allows euro and won transactions to settle simultaneously with cryptographic guarantees," Nazarov said. "Banks do not need to rebuild their existing back-end infrastructure."
He added that if Korea maintains its current trajectory, it has the technical readiness and market depth to become a genuine gateway for institution-led on-chain finance.
From financial data to card payments: connecting traditional finance on-chain
Nazarov does not expect the future of on-chain finance to play out as a winner-takes-all contest between traditional finance and decentralized finance (DeFi). His view is that DeFi will continue to drive rapid financial innovation while traditional finance adopts blockchain technology on top of its existing infrastructure.
Chainlink is focused on bridging the two systems — helping DeFi gain safe access to the hundreds of trillions of dollars in assets held within traditional finance, while giving financial institutions tools for transaction automation, service interoperability and data verification.
"We are not asking global institutions to choose one or the other," Nazarov said. "Chainlink's purpose is to connect the existing financial system to a new global financial market that relies less on specific intermediaries."
Traditional financial data providers are also moving on-chain. Deutsche Börse, the US Department of Commerce, FTSE Russell, S&P Global Ratings, Tradeweb and SIX Group are among those now delivering macroeconomic indicators and other financial data on-chain through Chainlink.
"Data providers have approached this carefully, putting security and reliability first because the value of proprietary data is so high," Nazarov said. "As institutional demand has grown, they have started to see the on-chain market as a new distribution channel and revenue stream."
The collaboration with Mastercard illustrates how traditional payment networks can serve as an on-ramp to the on-chain economy. Chainlink and Mastercard announced a partnership last June that allows cardholders to buy cryptocurrency directly on decentralized exchanges (DEX).
Nazarov said that as using digital assets becomes as seamless as an ordinary card transaction, on-chain finance will naturally see broader adoption.
Security risks — including bridge hacks that can occur when connecting different blockchains — remain a barrier to institutional participation. Chainlink has addressed this in CCIP through a globally distributed architecture with multiple independent operators and built-in risk controls.
"Kraken, Lido and Lombard each adopted CCIP after conducting their own security reviews," Nazarov said. "In recent months, the value of tokenized assets that have migrated their cross-chain infrastructure to CCIP has exceeded $7 billion."
Asset tokenization spreads as DTCC prepares for commercial launch
The asset tokenization market is growing rapidly, led by US Treasuries and money market funds (MMFs). According to RWA.xyz, the total value of distributed tokenized assets stood at approximately $37.3 billion as of Sunday, with US Treasuries and Treasury-linked funds accounting for about $16.2 billion of that total.
Data from the Bank for International Settlements (BIS) shows that tokenized MMF assets under management grew more than tenfold — from $770 million at the end of 2023 to about $9 billion by the end of October last year.
Nazarov said that as the market expands, managing assets after they are tokenized becomes increasingly important.
"Anyone can put a token on a blockchain, but what comes after is the hard part," he said. "Projects that have stalled failed to manage the asset lifecycle and lacked the secondary-market infrastructure and regulatory framework to support it."
For tokenized assets to trade as genuine financial instruments, prices and net asset values (NAV) must be updated in real time, and corporate actions such as dividends and voting rights must be processed without disruption. A system that restricts trading based on investor eligibility is also required.
The collaboration between Chainlink and the Depository Trust & Clearing Corporation (DTCC) illustrates the transition from proof-of-concept to commercialization. In 2024, the two organizations conducted a "Smart NAV" pilot to verify whether fund data aggregated by DTCC could be delivered on-chain — testing a basic prerequisite for tokenizing public funds.
The scope of the partnership has since expanded to a collateral appchain that handles collateral valuation, margin calculation and settlement on a continuous basis.
The collateral appchain is a shared ledger used jointly by collateral providers, recipients and custodians. Participants can verify ownership, value and availability of collateral in real time, with access to information governed by their permissions. Chainlink serves as the connectivity layer, supplying asset prices and valuation data and coordinating inter-institutional workflows through CRE.
Last month, DTCC also ran a pilot in which securities held at its subsidiary DTC were converted into tokens and traded in a live operating environment. The tokenized assets were used for collateral posting, securities lending, US Treasury and repurchase agreement transactions, delivery-versus-delivery (DvD) equity settlement and central counterparty (CCP) margin processing.
More than 30 firms participated in the pilot, including BlackRock, JPMorgan, Goldman Sachs and Vanguard. DTCC plans to launch its commercial tokenization service in October.
"DTCC processes securities transactions worth trillions of dollars annually, and its move from pilot to commercialization signals that the digital asset market has moved beyond the experimental stage," Nazarov said. "Institutions are now thinking about how to run full tokenization workflows across major asset classes at commercial scale."
'In the age of AI agents, traditional finance and DeFi will merge'
Market observers expect AI agents to play an increasingly prominent role in on-chain finance. Nazarov said that if AI agents are granted authority to move assets or execute transactions, every action must be verifiable. "Auditable records that regulators and financial institutions can trust are also essential," he added.
Chainlink is extending to AI agents the same trust infrastructure it developed for smart contracts — providing verified market data and reusable know-your-customer (KYC) credentials, enforcing controls that keep AI operating within defined permissions, supporting the movement of data and assets across blockchains, and generating verifiable audit trails of AI execution.
Nazarov does not see AI-driven automation, stablecoin payments, tokenized funds and collateral management as separate trends. Within a single on-chain ecosystem, he said, stablecoins will accelerate settlement speeds while tokenized collateral will improve asset utilization.
"AI agents will directly execute complex, multi-step financial tasks across the entire on-chain ecosystem," he said. "I am convinced that over the next few years, traditional finance and the DeFi ecosystem will converge into a single financial system."
kyoung@heraldcorp.com
