Progmat Unveils Roadmap for ‘On-Chain’ Equities and Legislative Proposals in Japan
Progmat, the leader of Japan’s “Digital Asset Co-Creation Consortium” (DCC), has published an interim summary detailing a comprehensive strategy to move traditional securities—including blue-chip stocks and investment trusts—onto blockchain infrastructure. The report, titled "On-chain-ification of All Securities," outlines both a product framework for "Japanese-style Tokenized Stocks" and a series of legislative recommendations aimed at modernizing Japan’s financial laws.
A New Model for Equity Tokenization
The DCC, a consortium comprising 330 member organizations, plans to launch a "Japanese version of Tokenized Stocks" using a Depositary Receipt (DR) method. This approach involves taking "micro-shares" (fractionalized equities) and listing them as book-entry securities through the Japan Securities Depository Center (JASDEC).
By linking these traditional listings with on-chain platforms and Private Trading Systems (PTS), Progmat aims to achieve several technical milestones:
- 24/5 Trading: Enabling liquidity outside of standard exchange hours.
- Real-time Settlement: Implementing 24-hour Delivery versus Payment (DvP) cycles.
- Data Transparency: Providing issuers with real-time insights into investor movements and trends.
The Push for a "Tokenization Law"
Recognizing that current legal frameworks present "friction" for on-chain finance, Progmat and its 47 working group partners—including major domestic banks, brokerages, and law firms—are proposing significant regulatory shifts:
- Short-term Reform: Amending the "Investment Trust Act" to introduce a "paperless" (dematerialized) system. Currently, the law’s requirement for physical certificates hinders the tokenization of investment trust beneficiary rights.
- Mid-to-Long-term Reform: The establishment of a dedicated "Tokenization Law." This legislation would grant legal "rights presumption" to records on a distributed ledger. This would ensure that the transfer of Security Tokens (ST) and Stablecoins (SC) on a blockchain carries the same legal weight and protections—such as bona fide acquisition—as traditional registries.
Market Context and Growth
The proposal comes as Japan’s Security Token market enters a high-growth phase. The balance of ST projects in Japan has exceeded 674.7 billion yen, with total cumulative issuance reaching 355.2 billion yen. Progmat projects that by the end of 2026, the market balance will surpass 1.5 trillion yen.
While the domestic market has historically been driven by real estate-backed STs for individual investors, Progmat notes that global trends are shifting toward tokenized Money Market Funds (MMFs) and equities. The consortium’s goal is to ensure Japan does not become a "Galapagos" market—isolated by unique domestic standards—but instead remains compatible with the accelerating global fusion of traditional and on-chain finance.
Next Steps
The DCC’s working group has already begun coordinating specific pilot cases for the "micro-share" model. Simultaneously, the group plans to formally submit its legislative "basic outline" to relevant Japanese authorities to begin the lobbying process for the proposed Tokenization Law.
The working group includes high-profile participants such as MUFG Bank, Mizuho Trust & Banking, Sumitomo Mitsui Trust Bank, Nomura Securities, and Daiwa Securities, signaling broad industry consensus for these structural changes.
Norbert Gehrke
