JAPAN Trends and Developments Contributed by: Daniel Jarrett and Hirofumi Kaji, Atsumi & Sakai
ties tokens. The minimum investment amount is at least JPY2 million (USD13,000), making the investment size relatively small in comparison to other real estate investment projects that were established in the past. This has made it signifi - cantly more accessible for retail investors. Additionally, a real estate digital security, Kobe Rokko Island DC, was released in November 2021 with a smaller investment unit compared to previous products. The minimum investment amount for retail investors in this security token was JPY500,000 (USD3,000) per investor. The lower minimum investment amounts led one study to estimate that, as of June 2024, the out - standing balance of digital securities issued in the form of security tokens targeting real estate exceeded JPY200 billion. Target assets for such investments include not only condominiums and commercial facilities, but also a wide variety of other assets. As an example, it has been reported by The Nikkei (13 August 2024) that Daiwa Securities Group has been attempting to digitally securitise solar pow - er generation facilities. The report also suggests that, in the future, assets such as aircrafts and ships may also be digitally securitised. Although not a security token in itself, a fund has been established that uses traditional real estate securitisation (real estate investment trust (REIT)) methods to invest in copyright relating to music. This has been established based on the observation that the spread of subscription- based businesses has made predicting cash flow generated from music simpler. There are also examples of funds investing in undisclosed assets such as LBO loans. These new assets also have the potential to be digi -
tally securitised. Furthermore, on 25 December 2023, Japan’s first secondary trading market for security tokens, called START, was launched by the Osaka Digital Exchange (ODX). START aims to offer flexible financing for enterprises and to provide a wide range of investment opportunities for investors. In under a year since its launch, six issues of real estate digital securities with security tokens are being traded on a daily basis. II) Bonds In May 2021, SBI Securities launched a secu - rity token offering for its own corporate bonds. As the project is aimed at retail investors, the minimum investment amount was very low: JPY100,000 (USD650). In 2024, Daiwa Securities Group offered JPY1 billion in security token bonds that can be paid in full electronically. Sony Bank also issued US dollar-denominated security token bonds. There is also a movement to issue perpetual subordinated bonds with security tokens, and security tokens in the debt sector are expanding their reach to retail investors. Securitisation and security tokens (exit strategy for retail investors) Historically, securitised products sold to retail investors were in effect limited to small place - ments issued in the form of private placements, such as exchange-listed J-REITs. However, various banks and corporations are considering plans to build a platform for trading corporate bonds in JPY10,000 (USD65) units for security token bonds. That said, the emergence of security tokens may make it possible for financial institutions to
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