Capital markets News

Japanese stock exchange JPX invests in Digital Asset Markets, the seller of Mitsui gold tokens

gold coins

Today the Japan Exchange Group (JPX) announced it invested 360 million yen ($3 million) in Digital Asset Markets (DAMS), giving it a 23.7% stake. The startup has been registered as a crypto-asset exchange in Japan for a year. It is currently the sole sales outlet for Zipangcoin, a gold-backed digital asset issued by Mitsui & Co Digital Commodities that launched earlier this month.

The founder and largest DAMS shareholder is Intertrade, which provides trading systems for JPX’s Tokyo Stock Exchange. Mitsui & Co is also an investor in DAMS.

The founders of Intertrade previously stated, “The pros and cons of virtual currencies notwithstanding, INTERTRADE believes blockchain technology will change the way the world works much as the internet did, and that a new era is approaching when we will see a steady stream of new services being launched based on blockchain technology.” Hence it decided to be at the forefront of that movement by setting up DAMS.

Although DAMS is initially the sole sales outlet for Zipangcoin, Mitsui & Co plans to expand token sales to other cryptocurrency exchanges, although we believe DAMS is the primary partner. We previously wrote about Zipangcoin earlier this month.

The purpose of Zipangcoin is to provide an inflation hedge that consumers can use without the need for a significant investment. However, it is also intended to be used as a payment method.

Mitsui & Co aims to issue 2 billion yen ($17m) of tokens in the first year and 12 billion yen ($104m) over three years, with a maximum issuance of $337 million.

The token price is approximately linked to the physical gold price on the London Metal Exchange (plus expenses), and Mitsui will buy the equivalent physical gold. One Zipangcoin (ZPG) is equivalent to one gram of gold. Initially, the token is not exchangeable for physical gold, but there are plans to do so in the future. We imagine that a token holder might need to have a significant amount of gold for redemption. Otherwise, it might be pretty expensive for Mitsui to ship a bunch of gold coins.

If either DAMS or Mitsui & Co Digital Commodities go out of business, various guarantees are in place. For example, if Mitsui & Co Digital Commodities failed, it would trigger the payment of a bank guarantee to DAMS in a trust account for the coin holders. 

The coins are issued on an enterprise blockchain “miyabi” from BitFlyer

Last week, JPX said it was exploring blockchain for green bonds.

Meanwhile, this week other stock exchanges have also announced digital asset activities. The London Stock Exchange Group acquired trading technology provider TORA, citing one of the motivations as TORA’s ability to provide access to digital assets as well as conventional asset classes. And NYSE parent ICE invested in security token startup tZERO

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