Sumitomo Mitsui, a Japanese bank, has ventured into a new partnership with Securitize. The move will see the introduction of the first ‘A-1’ rated security token in Japan.
Japanese Bank, Sumitomo Mitsui Trust Bank (SMTB) has introduced its first security token through collaboration with Securitize. This announcement was made on March 29. This move is very significant in the Japanese financial markets because the token will be the first to be launched under the Financial Instruments and Exchange Act (FIEA).
Rating and Investment Information, INC., which is a rating firm in the country, categorized the security token under an ‘A-1’ rating. Besides the security token has potential to meet its current goals.
Securitize is a digital securities firm that was first started in the United States in 2017. However, Securitize has also ventured into international markets and they have a division in Japan. Their presence in Japan has been favorable considering that they have been supported by major companies such as Softank, Sony and SBI.
In the first quarter of 2020, Securitize ventured into the Japanese real estate market by partnering with LIFULL, in Tokyo, to launch a tokenized investment for real estate investments. SMTB used the security tokenization platform of Securitize to release the token to willing investors.
How will it work?
Securitize created this token by issuing paper certificates to investors as proof of ownership to an underlying asset. Besides, Sumitomo Mitsui has launched a trust firm that will manage all the underlying assets under the new partnership deal.
One of the people who spoke about the partnership deal is Hirohito Niji, from SMTB. Hirohito praised the fact that SMTB was willing to venture more into digital securities. He further stated that the bank was committed to developing a clear roadmap to their clients by using digital technology and their banking knowledge to come up with innovative and proactive solutions.
SMTB started venturing in blockchain technology in 2016. This was after a partnership with IBM where they wanted to look at how they can use Digital Ledger Technology to improve its functions in retail, asset management and real estate. The bank is also a member of the Japan Security Token Association. Other members of the association include telecommunication firms in Japan such as Softbank and NTT.
Japan’s financial market is adapting very quickly to security tokens, with more firms venturing into this sector each year. The acceptance can be attributed to the Japan Financial Services Agency that recognized the Security Token Offering (STO) body in the country in May 2020.