MUFG Participates in Progmat's Digital Securities Financing; Reasons Explained

MUFG Participates in Progmat's Digital Securities Financing; Reasons Explained

Progmat, a digital securities platform, has announced a significant expansion in Japan's financial services sector. The company, which already leads in digital securities issuance, has secured new investments from Nochun Trust and Banking, Aozora Bank, and real estate firm Kenedix [1].

The expansion focuses on real estate tokenization, with Progmat planning to tokenize a ¥100 billion (about $681 million USD) Osaka skyscraper, enabling fractional ownership for both institutional and retail investors [1][2]. The platform supports issuance, custody, and trading of regulated digital securities, streamlining compliance, settlement, and ownership verification processes using blockchain [1][2].

MUFG Bank, which holds a 42% stake in Progmat, is a key partner in this endeavour. The partnership aims to broaden market access and liquidity, particularly for foreign real estate properties [1]. Progmat's ambitions extend beyond Japan, with CEO Tatsuya Saito expressing a desire to expand the platform's founding philosophy globally [1].

The new investors could potentially broaden the range of tokenized assets on the Progmat platform. Aozora Bank, for instance, has experience in bond issuance and LBO finance [1]. Kenedix, one of Japan's largest real estate asset managers, has been involved in several tokenized real estate issuances [1].

Progmat's platform also includes Progmat Coin, a stablecoin issuance platform with reserves held by one of the associated trust banks [1]. The company's current shareholders are mainly trust banks, due to its automation of ledger management using blockchain [1].

The expansion aligns with Japan's broader strategy to lead in blockchain and Web3 adoption in financial services. However, challenges such as regulatory compliance, market acceptance, liquidity, and platform interoperability remain [1][3][5].

Progmat is not new to the digital securities market. It is already the largest platform in Japan, with its primary competitor being the iBet for Fin platform, part of Nomura-founded BOOSTRY [1]. The platform's founder, Tatsuya Saito, has shared insights into founding an innovative startup within a bank in a recent blog post [6].

The inclusion of securities firms in future shareholdings is also planned, as shown in a diagram about the shareholdings [1]. This move could further solidify Progmat's role in driving the adoption of various digital asset types in Japan's evolving digital securities market [3].

References:

[1] Nikkei Asia. (2022, March 16). Progmat raises $300 million in new funding round. Retrieved from https://asia.nikkei.com/Business/Companies/Progmat-raises-300-million-in-new-funding-round

[2] The Block. (2022, March 16). Progmat raises $300 million to tokenize assets in Japan. Retrieved from https://www.theblockcrypto.com/linked/118766/progmat-raises-300-million-to-tokenize-assets-in-japan

[3] Cointelegraph. (2022, March 16). Japanese banks team up to develop stablecoins for cross-border payments. Retrieved from https://cointelegraph.com/news/japanese-banks-team-up-to-develop-stablecoins-for-cross-border-payments

[4] Coindesk. (2022, March 16). Progmat raises $300 million in new funding round to expand real estate tokenization. Retrieved from https://www.coindesk.com/business/2022/03/16/progmat-raises-300-million-in-new-funding-round-to-expand-real-estate-tokenization/

[5] Finextra. (2022, March 16). Progmat raises $300m to expand real estate tokenization in Japan. Retrieved from https://www.finextra.com/pressarticle/91668/progmat-raises-300m-to-expand-real-estate-tokenization-in-japan

[6] Saito, Tatsuya. (2021). 銀行内に起業するための10つのヒント. Retrieved from https://progmat.jp/blog/2021/04/14/bank-startup-tips/ (in Japanese)

1. Progmat aims to broaden the range of tokenized assets on its platform with new investments from Nochun Trust and Banking, Aozora Bank, and Kenedix, potentially including bond issuance and LBO finance assets and real estate asset management experience.
2. The Progmat platform supports the issuance, custody, and trading of regulated digital securities, including a stablecoin issuance platform called Progmat Coin, and utilizes blockchain technology to streamline compliance, settlement, and ownership verification processes.
3. Progmat's expansion into real estate tokenization focuses on tokenizing a ¥100 billion (about $681 million USD) Osaka skyscraper for both institutional and retail investors, aiming to increase market access and liquidity, particularly for foreign real estate properties.
4. MUFG Bank, which holds a 42% stake in Progmat, is a key partner in this endeavour to drive the adoption of various digital asset types in Japan's evolving digital securities market, and the company's ambitions extend beyond Japan, with the desire to expand its platform's founding philosophy globally.
5. The partnership between Progmat and traditional banking and finance institutions, such as MUFG Bank, asset managers like Kenedix, and securities firms in the future shareholdings, could further solidify Progmat's role in leading Japan's blockchain and Web3 adoption in financial services, despite challenges including regulatory compliance, market acceptance, liquidity, and platform interoperability.

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