MUFG to launch asset-backed security tokens with Nomura, SBI – Ledger Insights
MUFG Trust announced on Friday that it intends to use its blockchain-based Progmat security token platform to issue asset-backed securities (ABS). The tokens will involve real estate with Kenedix as the real estate asset manager. SBI Securities and Nomura Securities will underwrite the Security Token Offer (STO) and sell the tokens to investors. The solution essentially tokenizes real estate but complies with Japanese law.
In 2019, MUFG announced the formation of the Security Token Research Association (SRA) and, as part of it, created a group to focus on asset-backed securities. All the companies mentioned here are part of this group. The SRA started with 22 members, but now the association has more than 50 participants.
How it works
The real estate is placed in a fund, Kenedix as the real estate asset manager and MUFG Trust would issue a beneficiary certificate. In the past, this beneficiary certificate would have been paper, but it is now a security token issued using MUFG’s Progmat solution. SBI and Nomura Securities are the underwriters of the issue and would distribute it to their clients. MUFG Trust also acts as a custodian, the data being stored on the Progmat platform.
At the same time, many incumbents in the Japanese securities industry also participate in a self-regulatory body, the Japan Security Token Offering Association (JSTOA). All the companies in the project are members of JSTOA.
Additionally, Nomura and Nomura Research founded the BOOSTRY blockchain tokenization solution, in which SBI recently invested. BOOSTRY is also used for security token offerings and initially focuses on bonds. SBI Securities itself used the platform to issue a bond security token.
Compared to most countries, Japan is starting to push security tokens. This is in part because of new regulations enacted in May 2020, which have helped bring greater legal clarity to the sector. Before that, a security token offering could potentially be covered by both the Payment Services Act (PSA) and the Financial Instruments and Exchanges Act (FIEA). From now on, he will generally report to the FIEA.