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) 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, 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.”
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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.