Fractal FN is a startup that operates a responsible trust revenue securities service in a distributed ledger environment. CEO Moon Myeong-deok, who has over 10 years of experience in securities firms and asset management companies, founded the company in September 2021.
CEO Moon said, “Many people want to replicate the holdings of those with high stock revenue to achieve the same returns,” adding, “I hope to create a service where anyone can issue token securities through their stock accounts; I wrote my doctoral thesis on this topic, which became the current business portfolio.”
Fractal FN's 'Little Buffett' is a service that allows individuals to issue their own token securities (Security Token Offering: STO) through their stock accounts. STO refers to securities issued in the form of digital assets using distributed ledger technology.
The method involves a stock investment expert trust-processing the stocks held in their account and issuing an STO that contains their investment strategy know-how. Securities firms can then replicate this for additional issuance or liquidity. In simpler terms, individuals link their actual accounts, subscribe to it, and those who wish to view the account must pay to see it.
Investment experts will trust-process their portfolios and issue new STOs to create their own financial products. As the number of consumers grows and performance improves, the compensation increases.
Consumers purchase the same portfolio as the experts through securities firms, followed by trust processing to issue additional STOs similar to those of the experts. This way, they can pursue the same revenue as the experts' STOs.
CEO Moon emphasized, “Consumers who want to invest in Warren Buffett can buy shares of Berkshire Hathaway, and if they want to invest in Cathie Wood, they can purchase ARKK ETF (Exchange Traded Fund); similarly, consumers can buy the STO of the experts they desire to enjoy the same investment revenue.”
This service differs from mutual funds in that there is no need to address the setup related to consumer monetary trust or redemption funds. Additionally, it is differentiated from wrap accounts (discretionary investment) as the base price is determined through a trust method rather than through one-on-one contracts with consumers.
Fractal FN recruited a large securities firm responsible for account management and trust functions to receive approval for this service from the financial authorities. In consortium with this securities firm, they applied for innovative financial services to the Financial Services Commission last September and requested regulatory exceptions. The company plans to develop the STO system and launch formal services by the third quarter of 2025 once the 'Little Buffett' service is designated as an innovative financial service by the financial authorities.
CEO Moon noted, “Once designated as an innovative financial service in South Korea, we plan to expand overseas primarily in Asian countries where the difficulty of financial regulations is lower.”