Osaka Digital Exchange Co. is set to launch Japan’s first trading platform for digital securities in the form of security tokens issued by real estate firms Ichigo Inc. and Kenedix Inc. This groundbreaking initiative is driven by the increasing demand from individual investors for alternative assets that promise better returns.
Ichigo Inc., based in Tokyo, plans to offer approximately ¥3 billion ($20.1 million) in securities backed by real estate investments, with trading scheduled to commence on December 25.
Security tokens represent digitally managed securities, and their introduction to the exchange is poised to enhance liquidity and simplify the investment process for individual investors. While Ichigo’s initial offering is relatively modest, signaling a cautious approach to test market demand for unconventional securities, it aligns with Japan’s broader strategy to promote riskier assets with higher potential returns, addressing the financial needs of an aging population.
At the end of the previous year, Japanese households held over 2,000 trillion yen ($13 trillion) in financial assets, with more than half of it in deposits that typically yield interest rates close to zero, according to data from the Bank of Japan.
Beyond Japan, other Asian markets are also moving to facilitate more security token sales. Hong Kong has removed restrictions limiting offerings to professional investors, while South Korea has amended laws to permit the issuance and distribution of security tokens.
Ichigo has previously structured digital securities focused on residential properties, primarily in small lot deals for individual investors and business owners. The current landscape of Japan’s security token offerings market primarily revolves around the securitization of real estate assets such as hotels, hot spring resorts, and logistics facilities, with an outstanding balance of issuance totaling 127 billion yen, according to Progmat Inc., a digital securities issuance and management platform.
As Osaka Digital Exchange pioneers digital securities trading in Japan, it signifies a transformative step in broadening investment options for individual investors and contributing to the evolution of the country’s financial markets.