[NEWS] Daiwa Securities and Rakuten Securities issue Japan's first publicly-offered security token bonds that pay interest in electronic money

Seven domestic companies, including Daiwa Securities and Rakuten Securities, have announced that they will issue "publicly offered security token (ST) bonds" in which the entire interest will be paid in electronic money. This is the first attempt in Japan to pay all interest, excluding tax, in electronic money.

The seven companies collaborating are Daiwa Securities Group Holdings, Daiwa Securities, Rakuten Securities, Rakuten Payment, Mizuho Bank, Mitsubishi UFJ Trust and Banking Corporation, and Progmat.

Publicly offered security token bonds refer to security token bonds for which a securities notification, or shelf registration statement and shelf registration supplement, are submitted to EDINET when the bonds are offered.

The name of the publicly offered security token bonds is the "1st Unsecured Security Token Bonds (with limited inter-bond pari passu special clause and transfer restrictions)," with a total amount of 1 billion yen, and will be publicly offered to individual investors. The nickname of the bonds is "Daiwa Securities Group Headquarters Security Token Bonds."

The electronic money on which interest is paid is "Rakuten Cash (basic type)" issued by Rakuten Edy, a subsidiary of Rakuten Payment. Rakuten Cash can be used to pay in stores and online using the Rakuten Pay app. The term is one year, and the interest is currently scheduled to be 0.8%. In addition, if electronic money cannot be granted, the entire interest may be paid in cash.

Daiwa Securities and Rakuten Securities will underwrite the bond, Mizuho Bank will act as the bond administrator, and Mitsubishi UFJ Trust and Banking Corporation will act as the bond registry administrator. In addition, the bond will be issued using "Progmat," a general digital asset issuance and management platform licensed by Progmat.

Starting with this bond, we will provide a new method of fundraising to issuers who are considering paying interest in other ways than cash from a marketing perspective. In addition, we will provide attractive investment opportunities for investors and provide new value to society.

Companies are actively moving in the security token field

The Daiwa Securities Group is actively working on security tokens and blockchain as key technologies to achieve its medium-term management plan "Passion for the Best 2023". Since commercializing real estate ST in February 2022, Daiwa Securities has underwritten and solicited approximately 29.7 billion yen in real estate ST, and as of the end of January 2024, Daiwa Securities has the top share in Japan based on the underwriting amount.

In addition, as an effort toward digital currency and digital payments, Daiwa Securities conducted a demonstration experiment of digital corporate bond issuance using blockchain in February 2021, and was the first in Japan to conduct a demonstration experiment of digital corporate bond issuance with digital coins as payment, and successfully issued and purchased and cancelled digital corporate bonds.

The Rakuten Group is supporting the formation of personal assets and investment activities by expanding its investment products that utilize cashless payments, such as by developing a service that allows investment trust savings using "Rakuten Cash", the first in Japan.

Mizuho Bank has been leading the way in the development of bond management and fund settlement practices for security token bonds, leveraging its many years of experience as a leader in the public bond trustee business.

Mitsubishi UFJ Trust and Banking Corporation will use Progmat to manage the bond register and custody the private keys for this bond. There have been 23 public offerings using Progmat, with the balance of assets managed by the register reaching approximately 122.9 billion yen.

Reference:Announcement
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