MUFG-led consortium to focus on security token research
Thu, 07 Nov 2019, 07:35 am UTC
Japanese financial giant Mitsubishi UFJ Financial Group (MUFG) is setting up a new blockchain consortium focused on developing next-gen financial transaction service.
Called ST (Security Token) Research Consortium (SRC), the initiative involves the participation of 21 other members including KDDI Corp., Japan Securities Finance Co., Ltd., KPMG AZSA, Accenture, LayerX, Securitize and others.
According to a press release, SRC was established on Nov. 06 with the aim of offering blockchain-based infrastructure for enabling “seamless automatic securities settlement and fund settlement, as well as the protection of investors’ rights.”
The consortium members will conduct research and share knowledge in order to rapidly introduce the blockchain-based service. SRC will combine security token and smart contract technology with the ultimate goal of enabling fundraising and management on one platform, allowing managing various financial products, such as bonds, securitized products, etc., anytime, anywhere, and with anyone.
Security Token blockchain
MUFG said that a key area of focus of the consortium is minimizing counterparty risk – an issue currently faced in fundraising through tokenization. To address this issue, SRC is developing Progmat, a simple, speedy and secure platform.
The process will involve putting security rightsholder information on blockchain, which will be updated automatically whenever rights are transferred, with the rights legally claimable.
“Information about each security will be programmed at the time of issue and fund transfers associated with interest payments and redemption will be implemented automatically. Through the exchange of tokens on different blockchains without third party mediation, the Service aims to settle funds automatically and simultaneously upon the transfer of rights to securities,” the release said.
MUFG has also applied for a patent in Japan regarding infrastructure and organizational structure for the management of security tokens.
Tokenizing Fixed Income Assets
CoinDesk reported that Securitize, a platform enabling issuance and management of digital securities on the blockchain, is the consortium’s only issuance platform provider. The SRC initiative marks the company’s first opportunity to tokenize fixed income assets, including bonds.
In September, Securitize raised $14 million in a funding round that involved participation from MUFG Innovation Partners, the venture capital subsidiary of MUFG. It is registered that the U.S. Securities and Exchange Commission (SEC) as a transfer agent.
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