Japanese companies’ digital securities (security tokens)｜Possibility of P2P trading
1 Tokenizing unique real assets in the primary market raises investor interest
2 Excellent companies carry out STO
3 New establishment of digital asset exchange by stock exchange
4 P2P transactions between investors
These four scenarios will lead to the development of the digital securities (security tokens) market.
The market expansion of crowdfunding begins with a variety of small projects, but it is also less realistic in the securities market.
Stocks of Japanese small and medium enterprises are said to be bargain stock, but many people buy stocks of GAFAM, S&P 500 and QQQ.
Also, for example, even if you bought shares of ByteDance and Airbnb at a share post for the purpose of investing in IPO a few years ago, its value will drop in just a few months.
It is difficult to invest in private equity, and there is also the idea that the future of digital securities (security tokens) will be borne by more stable assets such as real estate.
※ At present, GAFAM stocks are the most “stable” stock market in 2020.
From an investment perspective, the operating income and trading volume of crypto asset exchanges are increasing even in Japan.
At the moment when many investments are gold and crypto assets, interest in digital assets is increasing, but digital securities (security tokens) have not yet been recognized as an investment target.
While the US ATS and each issuing platform that utilize blockchain technology are making efforts, the market is slowing down as many investors do not enjoy the benefits.
In the meantime, it is not uncommon for a promising project to run out of money.
Last week, tZERO announced a salary cut, and OpenFinance Network also announced in April that it would require listed companies to reconsider their contracts.
While these are undoubtedly the current state of the digital securities (security tokens) market, the boom in attractive asset tokenization will underpin the importance of the secondary market.
It is unknown when that will happen, but it can be said that the efforts of blockchain companies are extremely important in promoting the digitalization of the securities.
Digital securities issuance by Japanese securities and real estate companies
In Japan, securities and real estate companies are beginning to use blockchain.
“Token” is a name that is not very familiar in Japan, and there is a recognition that “digital securities” is easier for investors to understand.
It can be considered that more market participants can be attracted by expanding the efforts to spread as a new financial product in the context of digitalization of securities.
From around 2018, the STO has been attracting attention as a safer, more compliant way to conduct ICOs.
In 2019, many projects succeeded in raising funds mainly in the United States and Germany.
Many projects comply with the US SEC exemption provisions, and the STO has been used for blockchain-based financing.
Entrepreneurs and investors have high expectations for new initiatives.
However, the market is still small, and many investors have not yet enjoyed the benefits of issuing securities using blockchain technology.
It is said that streamlining operations related to securitization using blockchain technology will lead to higher yields.
Cases similar to Bourbon whiskey and Ferrari tokenization will continue to be announced.
One of the big problems in the market is that such unique investment products are not traded in the secondary and are not available to general investors, but it can be said that time will be resolved.
The expansion of the market will increase its reputation by having investors enjoy the benefits of digitizing securities and tokenizing real assets.
Under such circumstances, Japan is making efforts to digitize securities.
・Kenedix × BOOSTY × Sumitomo Mitsui Trust Bank
In Japan, Kenedix, Inc., BOOSTRY Co., Ltd., and Sumitomo Mitsui Trust Bank, Ltd. announced the issuance of digital securities.
The issuance of digital securities in collaboration with the three companies is the first initiative in Japan as a case of real estate miniaturization using blockchain technology, backed by real estate-related assets.
Using the blockchain platform “ibet”, the transfer of rights of preferred equity securities is digitized, and when trading, investors can directly share and manage information with the application.
*”Ibet” is developed and managed by BOOSTRY Co., Ltd.
The digital securities backed by real estate-related assets this time do not fall under “electronic record transfer securities rights” under the revised Financial Instruments and Exchange Act.
Therefore, in Japan, it is referred to as a “digital securities” rather than a security token.
Kenedix, Inc. is pursuing initiatives aimed at developing the real estate security token business in the future.
In the future, it is expected that the liquidity of the Japanese real estate market will be further improved by utilizing blockchain technology.
BOOSTRY Co., Ltd. is issuing digital securities in Japan following the case of digital asset bonds conducted by the Nomura Group in March of this year.
It will lead the digital securities market in Japan through pioneering efforts to digitize various assets and rights using blockchain technology.
Sumitomo Mitsui Trust Bank, Limited aims to provide services related to security tokens and DX based on this digital securities case.
Attention will continue to be paid to the efforts of the three companies to further develop the real estate and securities markets.
・Leed Real Estate Cayman Corporation plans to implement STO in compliance with Regulation D
Leed Real Estate Co., Ltd. announced that it will carry out STO in compliance with the “Regulation D”, which is the US SEC’s registration exemption provision, for overseas financing.
This is the first time a Japanese company has implemented an STO in compliance with US regulations.
It is said to bring benefits such as providing investment opportunities that allow more foreign investors to access Tokyo real estate and creating a more efficient real estate market.
Supported the STO of Leed Real Estate Co., Ltd. in cooperation with GRIP (DIFC) Ltd., which has been licensed by the Dubai Financial Services Authority, broker dealer in the US, Rialto Markets with ATS license, and Securitize, which has a high profile in Japan. doing.
The case of STO using a scheme that utilizes a Cayman corporation can be said to be a new initiative in the Japanese capital market.
It is a very important example for the Japanese STO market formation and future development that the Japanese company procured global funding in accordance with “Reglation D” based on the support from companies in the United States and Dubai.
There are great expectations for the STO, which connects the Japanese capital market and overseas.
Possibility of digital securities P2P trading
In April of this year, Securitize announced “Instant Access” that enables P2P digital securities (security token) transactions.
・KYC/AML check by issuer
・Compliant transactions are possible with the DS protocol
・Use P2P transaction network “Air Swap”
・Can be purchased from a transaction URL link
Given that it is possible to implement compliant transactions without going through an exchange, it will be of great interest to see how digital transactions (security tokens) using “Instant Access” will expand in the future.
Securitize provides the world with a new infrastructure for secondary markets as well as primary markets.
The digital securities (security token) market is highly expected to improve the liquidity of the capital markets of each country and accelerate the activation of corporate activities.
It is also possible that individual investors will be able to realize new transactions by being able to comply with blockchain technology.
In the existing securities exchange market as well, there are discussions about “a global exchange controlled by investors”, and the spread of digital securities (security token) transactions across borders through P2P is expected to further develop the capital market.
I wrote “The market expansion of crowdfunding begins with a variety of small projects, but it is also less realistic in the securities market.” at the beginning of this article.
However, given that unique crowdfunding projects sell out within minutes, I personally think secondary trading is important.
Also, if asked, “Why does ByteDance or Airbnb not issue securities (stocks) on the blockchain?”, that’s because the stock exchange is not compatible with the blockchain,” I will answer.
In Japan, securities and real estate companies are now issuing digital securities (security tokens) in earnest.
The entry of companies that have long built trust with investors will support the soundness and growth of new financial products.