SBI Group, one of Japan's largest financial conglomerates, has issued a ¥10 billion ($66 million) corporate bond as a security token, the largest of its kind in Japan. Around the same time, the country's dominant ST infrastructure, Progmat, finished moving more than ¥452 billion ($3.0 billion) in tokenized assets from Corda to Avalanche. From fractional bond ownership to a full infrastructure overhaul, here is what is happening at the frontier of Japan's digital securities market.

What Are Security Tokens, and Why Should You Care?

Security tokens (STs) are digital versions of traditional financial assets such as stocks, bonds and real estate, issued and managed on a blockchain. They carry the same legal protections as conventional securities but unlock powerful benefits: fractional ownership, real-time tracking of ownership, transparent pricing, and the potential for 24/7 trading.

Japan established the legal foundation for STs back in 2020 when it amended its Financial Instruments and Exchange Act (FIEA) to formally recognize "electronically recorded transferable rights." That early move gave Japan a head start, and now the market is accelerating.

The SBI START Bond: Japan's Biggest Corporate Bond ST

In March 2026, SBI Holdings issued the "SBI START Bond" (START stands for the secondary trading platform's name), a corporate bond security token worth ¥10 billion (approximately $66 million). That makes it the largest corporate bond ST ever issued in Japan.

Minimum investment: just ¥10,000 ($66). Traditional Japanese corporate bonds typically require investments of hundreds of thousands of yen. The SBI START Bond slashes that barrier, opening fixed-income investing to younger generations and smaller portfolios. SBI Securities has hinted that future issues could push the threshold below ¥10,000. The bond carries a 2.15% annual coupon and matures on March 23, 2029.

Sold out in six days. Web-based sales began on March 11 and were fully subscribed by March 17, a strong signal of retail appetite for this new product category.

Secondary market trading on ODX. Starting March 25, the bond began trading on "START," a proprietary trading system (PTS) operated by Osaka Digital Exchange. This is the first time a corporate bond ST has been available for market-based secondary trading in Japan, bringing price transparency and liquidity to a space that was traditionally dominated by over-the-counter deals with brokers.

More Than a Bond: Building Investor Relationships Through Blockchain

What sets ST bonds apart from traditional ones isn't just fractional pricing, it's the relationship between issuer and investor.

Because SBI START Bond is managed on a blockchain, SBI Holdings can track ownership in real time. Traditional bonds offer issuers almost zero visibility into who holds their securities after the initial sale. With STs, the company knows exactly who its bondholders are and can design ongoing engagement opportunities.

The first tangible example: purchasers receive XRP (Ripple's cryptocurrency) as a bonus. To claim it, investors need to open an account with SBI VC Trade, a crypto exchange within the SBI Group. It is a deliberate funnel: a bond purchase leads to crypto exchange onboarding, which leads to broader use of SBI's financial ecosystem.

SBI Holdings envisions a future where bondholders receive periodic benefits based on holding duration and amount, transforming bonds from "buy and forget" instruments into ongoing relationship channels. The exact shape of these future benefits is still under development, but the infrastructure to deliver them is already in place.

Why Now? The Return of Interest Rates to Japan

Japan has spent decades in ultra-low or negative interest rate territory, making corporate bonds unattractive to most retail investors. Why lock up your money in bonds yielding almost nothing?

That environment has fundamentally changed. With inflation rising and the Bank of Japan gradually normalizing monetary policy, interest rates have returned to meaningful levels. SBI Securities notes that more individuals are recognizing that savings deposits alone won't keep pace with inflation.

Japanese households hold over ¥1,000 trillion ($6.6 trillion) in savings, an enormous pool of capital that has historically stayed parked in near-zero-yield bank accounts. Corporate bond STs, with their low entry points and accessible trading, could become a compelling vehicle for channeling some of that capital into productive investment.

Progmat's ¥452 Billion Migration: A Tectonic Shift in Infrastructure

Progmat, founded by Mitsubishi UFJ Trust and Banking, is Japan's dominant security token platform. It accounts for roughly 63% of Japan's cumulative ST issuance volume and about 54% of its ST projects.

On February 26, 2026, Progmat announced it was migrating its entire platform from Corda 5 (an enterprise blockchain developed by R3) to a dedicated Avalanche Layer 1 network. The project, codenamed "Project Keystone," began in autumn 2025 and was declared complete on July 13, 2026. The ST projects that moved across were worth more than ¥452 billion ($3.0 billion) on that date, making it one of the largest tokenized-asset migrations in Asia. Progmat says rights transfers now process three to five times faster than before, with transaction finality under two seconds.

Why the Switch Matters

Corda served Japan's ST market well in its early years. As a permissioned enterprise blockchain, it provided strong privacy controls and met the regulatory needs of Japanese financial institutions. But it had a critical limitation: isolation. Corda couldn't easily communicate with other blockchains, meaning Japan's tokenized securities existed in a walled garden.

Avalanche L1 changes that equation fundamentally:

EVM compatibility. Every security token on Progmat becomes compatible with Ethereum's ecosystem, the largest and most developed blockchain developer community in the world. This means Ethereum's smart contract libraries, DeFi protocols, and development tools all become accessible to Japanese ST issuers.

Cross-chain settlement. Through Project Keystone's integration with Datachain's LCP (Light Client Proxy) technology and Avalanche's native cross-chain messaging, Progmat is enabling Delivery versus Payment (DvP) settlement between security tokens and stablecoins across different blockchains. This is the bridge between Japan's regulated securities market and global on-chain finance.

Foreign investor access. International institutional investors operating on EVM-compatible chains can now access Japanese tokenized securities directly, breaking down what was previously a Japan-only market.

Project Trinity and Project Pax

Progmat's ambitions extend beyond the chain migration:

Project Trinity (announced August 2025): A proof-of-concept involving eight major institutions, including Sumitomo Mitsui Banking Corporation, Daiwa Securities, and SBI Securities, testing DvP settlement using stablecoins in secondary market ST transactions.

Project Pax (running since September 2024): A cross-border initiative with European, Korean, and Japanese institutions building infrastructure for Payment versus Payment (PvP) settlement between stablecoins issued under different legal jurisdictions.

Together, these projects are assembling a multi-token (ST × stablecoin), multi-chain, cross-chain ecosystem that positions Japan's ST infrastructure as globally interoperable rather than domestically confined.

Japan's ST Market by the Numbers

  • Cumulative public ST issuance exceeded ¥193.8 billion ($1.28 billion) as of July 2025
  • Market projection suggests the sector could surpass ¥1.05 trillion ($7 billion+) by end of 2026
  • Asset diversity is expanding: real estate remains dominant but corporate bonds, private equity fund-of-funds, and potentially tokenized stocks and investment trusts are entering the pipeline
  • Tax reform in 2025 opened the door for STs backed by movable property, further broadening the asset classes available for tokenization

The narrative arc is clear: from a market dominated by real estate tokens, Japan's ST ecosystem is rapidly diversifying into a full-spectrum digital securities market.

How Japan Compares Globally

United States: Wall Street Goes On-Chain

The U.S. has moved aggressively in 2025-2026. The GENIUS Act established a federal framework for stablecoins. The SEC launched "Project Crypto" to clarify how securities laws apply on-chain, and the DTC issued a no-action letter enabling tokenization schemes. Most dramatically, the NYSE announced a partnership with Securitize in March 2026 to build a regulated digital trading platform for blockchain-native equities, ETFs, and bonds, with a pilot targeting Q3 2026. The U.S. approach is top-down, driven by Wall Street incumbents integrating blockchain into existing infrastructure.

European Union: Rules First, Innovation Follows

The EU's MiCA regulation took full effect in December 2024, while the DLT Pilot Regime allows regulated entities to experiment with blockchain-based securities trading and settlement. Germany's BaFin requires full prospectuses for STOs, and Switzerland's DLT Act provides blockchain securities with full legal equivalence to traditional instruments. Europe's approach is comprehensive but complex, with cross-jurisdictional fragmentation remaining a challenge.

Singapore: From Pilots to Playbooks

The Monetary Authority of Singapore (MAS) has been a global leader through Project Guardian, which moved from pilots to operational frameworks in 2025. MAS published guidelines for tokenized funds, announced trials of tokenized central bank bills, and continues to expand workstreams covering tokenized bank liabilities, FX, and interoperability standards. Singapore combines regulatory clarity with institutional innovation, making it arguably the most mature market for tokenized financial products.

Japan's Unique Position

Feature Japan US EU Singapore
Regulatory framework FIEA (amended 2020) SEC/GENIUS Act MiCA/DLT Pilot SFA/MAS
Primary asset classes Real estate, bonds Treasuries, equities Bonds, funds Bonds, funds
Retail access From $66 Mostly accredited Gradually expanding From ~$5,000
Secondary market ODX (PTS) tZERO/NYSE (building) DLT Pilot sandbox ADDX
Core infrastructure Progmat (Avalanche) Multiple platforms Fragmented Multiple platforms

What makes Japan stand out is the combination of early regulatory clarity, genuine retail accessibility, and a unified infrastructure platform in Progmat. While the U.S. has Wall Street muscle and Singapore has regulatory sophistication, Japan has built something closer to an integrated national ecosystem where issuance, distribution, and secondary trading are connected through a single, evolving infrastructure layer.

Could Japan Become a Model for Global ST Infrastructure?

The question isn't whether Japan's ST market is growing, it clearly is. The question is whether its approach can serve as a template for other nations.

The case for yes: Japan achieved regulatory clarity early, built a centralized infrastructure platform that major financial institutions rally around, and has now moved to an open, interoperable blockchain that connects to global DeFi. The combination of institutional rigor and technological ambition is rare.

The case for caution: Japan's market remains predominantly domestic, denominated in yen, and focused on Japanese investors. True global relevance requires cross-border flows, foreign issuer participation, and integration with international stablecoin infrastructure, all of which are works in progress.

The deciding factor: Progmat's Avalanche migration and cross-chain settlement capabilities. Now that Project Keystone has landed, the open question is whether cross-chain settlement genuinely connects Japan's regulated ST market to global on-chain finance. If it does, Japan will have demonstrated something no other country has: a fully regulated, retail-accessible, institutionally-backed digital securities market running on public blockchain rails with global interoperability.

SBI Securities has stated its vision plainly: a future where half of Japan's retail corporate bond market is issued as security tokens. SBI Holdings goes further, calling the START Bond a stepping stone toward financial products that "could only exist because of security token technology."

What about in your country? Are digital securities or tokenized bonds available to everyday investors? How does your government regulate blockchain-based financial products? We'd love to hear your perspective.

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