Mitsui & Co. Digital Asset Management aims to grow security token market to 1 trillion yen

Mitsui & Co. Digital Asset Management is a company that uses digital technology to tokenize real assets such as real estate and infrastructure, and develops a business that aims to facilitate their distribution and management.

Through this platform, investors can invest in small amounts of assets, improving asset liquidity and providing a wide range of investment opportunities.

We spoke to Tamoto, a member of the Digital Investment Banking Department at Mitsui & Co. Digital Asset Management, who is in charge of BizDev toward the social implementation of digital securities, about the future of ST and digital securities (security tokens).

Security tokens will bring vitality to real assets and intellectual property around the world

Please tell us again about your career.

Eisuke Tamoto (hereinafter, Tamoto): During my student days, I joined LayerX, a company that deals with fintech and AI, as an intern. There, I worked in the fintech field, and later received a proposal from Mitsui & Co. for a new business based on security tokens.

That was the trigger for Mitsui & Co. to launch Mitsui & Co. Digital Asset Management in collaboration with LayerX. After graduating from university, I was seconded to the company in April 2020, where I remain to this day.

Mitsui & Co. Digital Asset Management (MDM) launched "ALTERNA" as an asset management service for individuals in May of last year. What are your thoughts on the service since its release up to the present?

Tamoto: To be honest, it took a long time to get started. We launched the company in April 2020 and began service in May 2023. It took a little over three years to launch a new service for individual investors.

It's been 10 months since the service was released, but my impression is that investors of a wide range of ages have signed up. Compared to other major securities companies that handle digital securities, we are pleased to see that we have a particularly high usage rate among younger investors (in their 20s to 40s).

The cumulative amount of security tokens issued via ALTERNA and external securities companies exceeded 25 billion yen as announced on February 20th of this year. What are your honest thoughts on these numbers?

Tamoto: I think awareness of digital securities as a new investment format is spreading.

In fact, we have received more investments from investors than we expected in our service, and there are more investors who invest in multiple digital securities than we initially expected, so we feel that it is becoming recognized as an investment product.

One of the strengths of the ALTERNA service is the UI/UX, and we have received comments such as "It's easy to understand and simple when you actually try it," "The simplicity and security of the investment process is attractive," and "The abundant information disclosure gives you a sense of security."

Through these experiences, I think that even if investors invest 100,000 yen per share, they have the feeling that they have some spare capacity and would like to invest another share. In addition, we provide investors with monthly reports about ALTERNA.

For example, detailed information such as "This room in this property has become available." Since we provide specific information, we think that owners feel more secure.

As MDM, what are your target figures, such as the amount of security tokens to be issued, and what missions do you think you need to achieve?

Tamoto: Our management philosophy is "Activate dormant money." Dormant money refers to things like savings in savings deposits and in safes. Our philosophy is to awaken even a little of this money, and revitalize real assets and intellectual property in Japan and around the world.

It is said that there is about 1000 trillion yen in savings in Japan as a whole, so our goal is to see how much of it we can activate. If we could awaken even 0.1% of that, it would be worth 1 trillion yen. Our mission is to see how big a market we can grow it into.

What do you think is the biggest benefit of security tokens, and what are your expectations?

Tamoto: With the premise that the benefits of security tokens have not yet been fully utilized, there are two benefits that I think will emerge as we develop our business. The first is the possibility of expanding the options for investment products by combining them with utility tokens.

Specifically, by combining utility tokens with security tokens, it may be possible to provide utility to security token holders and easily pass that utility on to others.

This will make it possible to provide not only monetary benefits but also value such as benefits through security tokens. This means that it can function not only as an investment product but also as a marketing tool.

Currently, we are limited to real estate, but in fact, the hotel industry and others have praised our approach for its marketing potential. Promoting properties that are attractive to investors through the ALTERNA brand has become a marketing strategy that goes beyond simply promoting investments.

In the future, if we can include infrastructure assets such as aircraft and railways, new products and services will be born. This is a major potential benefit. Furthermore, I believe that it will lead to benefits for all three parties: investors, businesses, and operators.

Another benefit is the simplification of transfers. If secondary markets such as Osaka Digital Exchange (ODX) become more active, it will become easier to liquidate assets, which will lead to greater product diversification, such as the creation of long-term products.

I hope that ST will be used to create new products and services that provide benefits through everyday experiences such as flying.

The tokenization of real world assets (RWA) is currently a hot topic. How big do you think real world assets will grow in the future?

Tamoto: We are involved in financial products and are focusing on how RWA can be used as a financial product. It is unclear at this stage how large the assets will be. However, when considering the scope of its spread, we believe that in the early stages, the domestic and international real estate markets will be the main stage.

In terms of diversity, regional diversity will be the first phase. In particular, overseas real estate is expected to develop from this year to next year.

I think that this will rapidly diversify the real estate market. Next, assets in the infrastructure field are expected to be introduced to the market. We expect that starting from these fields, the range will gradually expand to more familiar assets such as automobiles.

The reason is that while real estate and infrastructure are relatively easy to manage, movable assets tend to be more complicated to manage and the difficulty increases. We predict that it will start with large-scale assets and gradually spread to assets that are closely related to daily life.

I also believe that ST conversion of copyrights will be realized in the future, and I personally look forward to copyrights being commercialized before small-scale movable assets.

By combining utility products, expanding asset types, and diversifying the types of financial products, security tokens will be accessible to more people.

If there is anything that could act as a catalyst to help security tokens become more widely used by general investors in the future, please let us know.

Tamoto: Broadly speaking, there are three. The first is products that combine utility products, products that come with perks and benefits. The second is the expansion of asset types. Products that allow you to own airplanes and trains. And the third is diversifying the types of financial products.

For example, in addition to equity products, we plan to offer more stable products with debt security properties, and create products with the same marketability as fixed-term deposits. By offering a wide range of financial products, we hope to meet the needs of a variety of investors.

Rather than developing products that exploit loopholes in the law, we aim to provide investors with products that can be used for the long term.

You've said before that there is pressure when dealing in financial products, but is there anything you keep in mind when taking on the challenge within these regulations?

Tamoto: I think we should strive to create products that are transparent, easy to understand, and sincere for investors. The more innovative the product, the more regulatory issues it will come with, but rather than developing products that hack around loopholes in the law, I think it's important to formulate products that can be used for the long term and communicate them to investors.

I think it's important to steadily and sincerely pursue what you truly want to do. We aim to not commit fraud in this field and to maintain integrity. I hope to continue to cherish this corporate culture.

Please tell us what vision MDM is aiming for and what are ALTERNA's future prospects?

Tamoto: In line with the motto, "Activate dormant money," we would like to revitalize dormant money through ALTERNA and invigorate various assets.

We also want to expand our business so that investors are aware that there are a variety of products available by visiting the ALTERNA website. We would like to take on various challenges in the future so that we can become a general financial trading company and give back to society.

Profile

Eisuke Tamoto
Mitsui & Co. Digital Asset Management Co., Ltd.

Graduated from the Faculty of Law at the University of Tokyo. Joined LayerX as an intern in March 2019. Was involved in the preparations for the establishment of Mitsui & Co. Digital Asset Management, and was seconded to the company upon its establishment. He established the Digital Investment Banking Department and is in charge of BizDev for the social implementation of digital securities.

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