Japan’s very first digital bond

Although yesterday, we enthusiastically reported that SBI Group have announced the first Security Token Offering (STO) in Japan, we might have to add the temporal qualifier “after the enforcement of the revised Financial Instruments and Exchange Act on May 1, 2020”, as Nomura and Nomura Research Institute (NRI) had issued a “digital bond” based on the ibet blockchain platform already in March, albeit under the old regulation, or in a regulatory grey zone, whatever the case may be.

In fact there were two issuances, a “digital bond” and a “digital asset bond”. The bond register for both bonds was managed using ibet, enabling issuers to keep track of bondholders, which can be challenging with traditional bonds.

The digital asset bond provides digital assets as coupon payments to investors instead of interest, in this case points which can be redeemed in cafes. It was offered directly to investors by NRI, while Nomura Securities served as underwriter for the digital bond. NRI solicited investors for the digital asset bond using a smartphone app that connects to ibet.

For both bonds, Nomura Trust and Banking acted as fiscal agent, while BOOSTRY (at that time a joint venture only between Nomura and NRI, with SBI acquiring a 10% in July 2020, reducing Nomura’s majority stake) provided its blockchain platform “ibet” and acted as registration agent.

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