Today SBI Securities launched its first Security Token Offering (STO) targeted at retail investors. The blockchain-based STO was for a corporate bond issued by SBI Securities itself.
Last year SBI invested in BOOSTRY, a company set up by Nomura and Nomura Research which developed the ‘ibet for FI’ security token platform used for this issuance.
Perhaps because it’s the first retail attempt, the issuance is not massive at Yen 100 million ($920,000). The minimum investment is Yen 100,000 ($921), and the interest rate on the one year bond is 0.35%.
As an early investor in Ripple, and a holder of large amounts of the XRP cryptocurrency, SBI has previously given away XRP as dividends to stockholders. For the STO, it’s also giving XRP to bond purchasers.
Last year another SBI subsidiary, SBI e-Sports issued a tokenized stock.
Usually, a security would use a central securities depository (CSD) such as the Japan Securities Depositary. A CSD is no longer required because a blockchain can log all transactions, keep a record of ownership, and execute smart contracts for corporate actions such as paying coupons on a bond or dividends on a stock. And the law in Japan was recently changed, paving the way for STOs.
Meanwhile, SBI Holdings is also a member of the Japan STO Association, an industry body that boasts most of the Japanese securities sector as members. SBI is a prolific blockchain investor. For digital assets, it has a joint venture in Singapore with the Swiss stock exchange SIX, it’s an investor in the Boerse Stuttgart Digital Exchange, and is planning a blockchain-powered digital securities exchange in association with SMBC.
BOOSTRY is one of many platforms around the world that will enable the issuance of security tokens. One of the challenges is that only the participant’s clients can invest in the assets of the network. What’s needed is to pool the clients of all the networks. To address this challenge and create a broader pool of investors, FinP2P is one solution aiming to route orders between the platforms.