Six Japanese Securities Giants Form Self-Regulatory Body for STOs

Six Japanese financial giants teamed up to establish an association to self-regulate security token offerings (STO) in the country, Monex announced on Tuesday.

Dubbed the Japan Security Token Offering Association, it has been established by Monex Group, Daiwa Securities Group, kabu.com Securities, Nomura Securities, Rakuten Securities, and SBI Securities. The proposed guidelines of the self-regulatory body will be effective from October 1, 2019.

After the burst of the Initial Coin Offering (ICO) Initial Coin Offering (ICO) An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Acco An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Acco Read this Term) bubble last year, the global market is now seeing potential in tokenized securities. Many players in the US are pushing for an STO platform, and a similar trend is also starting in the Japanese market.

“In financing through an STO model, issuers offer investors security tokens, securities issued through digital means such as Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term, instead of issuing equities and other securities as in a traditional financing model,” the announcement explained.

“Unlike initial coin offerings (“ICO”), which has experienced some fraudulent cases, issuance and trading of security tokens are legally recognized and prescribed.”

The key role of the self-regulatory body will be to explore STO business opportunities in the country and also ensure compliance laws and regulations for investor protection.

Yoshitaka Kitao, the representative director and CEO of SBI Securities, has been appointed as the chairperson of the newly formed body while one representative from all the other founding companies joined the board of directors.

“To this end, the association is planning to obtain certification as an Authorized Financial Instruments Firms Association based on the Financial Instruments and Exchange Act and to fully leverage its capabilities as a self-regulatory organization,” the announcement added.

Creating a regulated environment for blockchain businesses

Meanwhile, the crypto exchanges operating in the country also formed another self-regulatory body named the Japanese Virtual Currency Exchange Association. The regulatory body introduced operating guidelines in June last year to safeguard the exchanges from potential risks.

To date, the Financial Services Agency (FSA) granted the license to 20 companies, the most recent one being a subsidiary of Line.