The scale of Japan's security token market is limited, and the Osaka Digital Exchange reflects the current state of development
During the panel discussion at the WebX 2025 conference, Kimio Mikazuki, representative director and president of the Osaka Digital Exchange, hosted an important dialogue on the prospects of integrating Web3 with Japanese security tokens. Mikazuki admitted at the beginning that the development of Japan's digital securities market has been slow over the past five years, with a total issuance of only about 220 billion yen. Although there have been larger-scale issuance cases recently, the cumulative amount is still estimated to reach only about 60 billion yen.
He specifically mentioned the operational model of the Osaka Digital Exchange, which, although using blockchain technology for security token trading, operates similarly to traditional securities trading, employing a T+2 settlement system, with token transfers and cash settlements conducted separately and still requiring processing through traditional clearing institutions such as Japan Securities Clearing Corporation (JSCC).
Kimio Mikazuki humorously remarked that some have referred to the Osaka Digital Exchange as the 'Osaka Analog Exchange' or 'Osaka Manual Exchange', reflecting Japan's conservative status in the digital securities field.
He noted that although Japan has relatively clear regulations regarding cryptocurrency assets, not all norms have been perfected in the early development stages, and incidents like the cybersecurity issues at BitPoint Japan have made the market development more cautious. Compared to the active development of cryptocurrency trading overseas, particularly with the recent rise of DeFi platforms allowing Japanese investors to participate, the domestic security token market still has significant growth potential.
Franklin Templeton pioneers tokenized funds, addressing pain points of traditional operations
Mitsunori Yuasa from Franklin Templeton's Japan business development, digital, and fintech department shared the company's pioneering experience in the field of tokenized funds. He revealed that Franklin Templeton issued the world's first tokenized fund in the United States in 2021, a move inspired by the rich background of the company's CEO, Jenny Johnson, in operations and back-office processes.
Mitsunori Yuasa emphasized that traditional fund management faces many operational challenges, including complex settlement procedures, difficulties in coordinating multiple participants, and high operational costs.
Mitsunori Yuasa elaborates on how tokenization technology can improve these traditional pain points. Through blockchain technology, the processes of fund issuance, trading, and settlement can be significantly simplified, not only reducing operational costs but also enhancing overall transparency and efficiency.
He pointed out that traditional fund management involves numerous intermediaries, with each link adding cost and complexity, while tokenization technology can reduce intermediary links and achieve more direct value transfer.
Although the regulatory environment is still developing, Franklin Templeton's pioneering experience has demonstrated the feasibility of tokenized funds, providing important reference cases for other financial institutions and creating more convenient investment channels for investors.
Securitize and Daiwa Securities share experiences on how traditional brokerage firms embrace digital transformation
Eiji Kobayashi, the head of Securitize Japan, analyzed the technological infrastructure development of the security token market from the perspective of a technology service provider. As a leading security token platform globally, Securitize has accumulated rich experience in markets such as the United States, and Kobayashi emphasized that technological standardization and compliance are key factors in driving market development.
He pointed out that security tokens are not only a technological innovation but also require the establishment of viable business models within the existing regulatory framework, which necessitates close cooperation between technology providers and traditional financial institutions.
Atsushi Itaya, managing director of Daiwa Securities, elaborated on digital transformation strategies from the perspective of a traditional brokerage firm. He stated that as an important securities company in Japan, Daiwa Securities is actively evaluating the impact and opportunities of security tokens on traditional business models.
Atsushi Itaya believes that security tokens can offer clients more diversified investment options while also creating new revenue sources for brokerages.
However, he also admitted that traditional financial institutions face challenges in embracing new technologies, including internal system integration, staff training, and adjustments to risk management systems. Atsushi Itaya emphasized that successful digital transformation requires a gradual approach, achieving an appropriate balance between innovation and risk control.
Mitsui Sumitomo Trust Bank lays out trust services, issuing stablecoins brings new opportunities
Manatomo Yoneyama, senior executive director of Mitsui Sumitomo Trust Bank, provided an in-depth analysis of the development prospects of digital asset custody and trust services from the perspective of trust banks.
Manatomo Yoneyama pointed out that trust banks play an important asset custody role in the traditional financial system. As the digital asset market rises, how to extend existing trust expertise into the digital realm has become an important issue. He emphasized that digital asset custody involves not only technical aspects but also the need to establish a sound legal framework and risk management mechanisms.
Manatomo Yoneyama is particularly concerned about the impact of stablecoins soon to be issued in Japan on the overall digital asset ecosystem. He believes the introduction of stablecoins will provide significant liquidity support to the security token market, while also offering new business opportunities for trust banks.
Manatomo Yoneyama stated that Mitsui Sumitomo Trust Bank is actively researching how to combine traditional trust services with blockchain technology to provide customers with safer and more efficient digital asset management services. He anticipates that as the regulatory environment becomes clearer, trust banks will play a more important role in the digital asset ecosystem, especially in serving institutional investors.
The regulatory framework is gradually improving, and the integration of Web3 with traditional finance is accelerating
Experts generally believe that as the global regulatory environment gradually clarifies, particularly with major markets like the United States improving their regulatory frameworks for cryptocurrency assets, Japan also faces pressure to accelerate the establishment of related systems. Security tokens, as a bridge connecting traditional finance and the Web3 world, are receiving significant attention for their development prospects.
Experts point out that the Financial Services Agency of Japan is actively reviewing current regulations and considering moving cryptocurrency asset regulation from the 'Payment Services Act' framework to the 'Financial Instruments and Exchange Act' system, which will provide a more solid legal foundation for the security token market.
With stablecoins set to be officially issued in Japan, the industry holds an optimistic outlook on the overall development of the digital asset market. Experts believe that the integration of Web3 technology with the traditional securities market will be a gradual process requiring close cooperation among regulatory agencies, financial institutions, and technology providers. It is expected that in the coming years, as technology matures and regulatory frameworks improve, Japan's security token market will enter a rapid development phase, offering investors more diversified investment choices while creating new business opportunities and revenue sources for financial institutions.
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The article 'WebX2025: Japan's security token stuck, four major institutions gather to discuss: where are the difficulties?' was first published in 'Crypto City'
