Tokyo supports the issuance of digital securities
On May 31, the Tokyo Metropolitan Government Policy Planning Bureau announced the start of a digital securities (security token) issuance support project. This is an effort to promote the widespread use of blockchain technology and diversify funding for startups.
Digital securities are issued using blockchain technology, enabling smaller issuances than conventional securities, and new securities such as products that had no secondary market gain liquidity and become easier to convert into cash. It is expected to lead to the creation of a new market. These characteristics are said to be useful in promoting investment by individuals and diversifying funding for start-up companies.
A new support project of the Policy Planning Bureau will subsidize part of the expenses when business operators in Tokyo issue digital securities. Specific subsidized expenses include platform usage fees, consultation expenses with experts, and system development expenses. The subsidy rate is set at 1/2 for general businesses and 2/3 for start-up companies, with the maximum amount of subsidy per case set at 5 million yen.
The application period is from May 31, 2023 to February 29, 2024. Applications are accepted at any time, but will be closed when the budget limit of the Tokyo metropolitan government is reached. Subsidies will be selected at a review meeting held approximately every one to two months.
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Part of profitable Tokyo innovation strategy
Blockchain, also known as distributed ledger technology, processes and records transaction histories in a decentralized manner. Its use in the financial sector is expanding due to its ability to easily prevent record falsification and fraudulent transactions.
The Tokyo Metropolitan Government Bureau for Policy Planning is promoting a new business to support the issuance of digital securities as part of blockchain technology. This business is expected to utilize the characteristics of digital securities, increase the liquidity of funds between individual investors and start-up companies, and create new economic activities.
This initiative is being promoted as part of the Tokyo Metropolitan Government’s “Future Tokyo Strategy” announced in December 2019. ” is positioned as part of the realization project.
This strategy aims to increase the productivity and added value of Tokyo’s industries and create new businesses and innovations through the use of cutting-edge technology and the organic collaboration of the diverse entities that support Tokyo’s economy. .
Through the digital securities issuance support project, the Bureau of Policy Planning of the Tokyo Metropolitan Government hopes to promote the sharing of know-how and problem solving, and as a result, promote the economic development and technological innovation of Tokyo. Detailed application guidelines and application methods for this project are posted on the website of the Tokyo Startup and Global Financial City Strategy Office.
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Domestic trends in the digital securities market
Currently, steady progress is being made in establishing a private trading system (PTS) that will realize a secondary distribution market for digital securities. The move is aimed at increasing convenience for investors and making corporate funding more flexible.
As part of this, Sumitomo Mitsui Financial Group and SBI Group jointly established “Osaka Digital Exchange Co., Ltd.” in April 2021. The new company aims to streamline the trading of stocks and digital securities by increasing distribution and redemption opportunities.
Furthermore, the Japanese government is also making moves to promote trading of digital securities. According to the “Basic Policy for Economic and Fiscal Management and Reform 2022” (commonly known as the “Basic Policy”) announced by the government, “In order to promote Fintech, we will promote the development of a system for raising funds through digital securities. While considering protection, we will relax the screening criteria for crypto-assets and create an interpretation guideline for economic functions as a means of payment.”
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