Two "S"s pave the way for the future──Winning the global "RWA tokenization" competition with stablecoin x security token【Column】 | CoinDesk JAPAN

The fiscal year 2025 has begun. The cryptocurrency market is showing unstable movements due to the impact of Trump tariffs. Following Trump's election victory last November, Bitcoin (BTC) briefly surpassed $100,000 in December. While 2025 was expected to bring "even stronger tailwinds," those expectations have not been met so far. Rather, there is a strong sense of disappointment.

However, on the other hand, turning our eyes to the domestic situation, nearly 1 year and 10 months have passed since the enforcement of the amended Payment Services Act on June 1, 2023, and finally, on March 26, SBI VC Trade began handling "USDC" as the first stablecoin (SC, electronic payment method) for general users.

▶Related Articles: USDC will officially launch on the 26th, SBI and US Circle will establish a joint venture to promote the adoption of USDC──Bitflyer, Bitbank, and Binance are also planning listings and circulation【Update】

On April 1, the start of the new fiscal year, Nikkei reported that Mitsui Sumitomo Financial Group (FG), a representative megabank in Japan, will jointly develop a stablecoin, and an official announcement was made on the 2nd. On the same day, Yomiuri Shimbun reported in an interview with President Hiroshi Kubota that Mitsubishi UFJ Trust and Banking Corporation has completed the development of a yen-linked stablecoin, which is expected to be the first issuance as an electronic payment method.

Furthermore, on April 10 of the following week, the Financial Services Agency publicly announced the verification results from the study group, which had been conducted privately, as "Verification of the System Related to Cryptocurrency (Discussion Paper)." This clarified the possibility of regulating cryptocurrencies by dividing them into "two categories."

▶Related Articles: Cryptocurrency may be regulated in two parts ── The Financial Services Agency has published a discussion paper on "Verification of the System Related to Cryptocurrency Assets."

The market seems to be fluctuating, but the environment surrounding cryptocurrencies has made significant progress as we enter the new fiscal year. One of the main points of interest for the fiscal year 2025 is undoubtedly stablecoins. Following USDC, there is growing anticipation for where and what kind of stablecoins will emerge.

What are the expected use cases for stablecoins?

Stablecoins are expected to be used for cryptocurrency transactions for the time being. They serve as what is known as "waiting funds." Globally, they are used as trading pairs with cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) on exchanges.

However, in Japan, banking services such as online banking are well-developed, and there is no significant inconvenience when transferring from a bank account during cryptocurrency transactions.

Therefore, Yoshitaka Kitao, the representative director and president of SBI Holdings, which has SBI VC Trade handling USDC, stated that the primary purpose of handling USDC is to "provide customers with returns that exceed dollar deposits" and to target the "6 trillion yen foreign currency deposit market." It is a stablecoin as a new financial product that offers yield rather than just a payment method.

〈SBI Holdings President and CEO Yoshitaka Kitao: CoinDesk JAPAN〉Currently, the most anticipated use case for stablecoins is their application in the B2B market, such as corporate payments and cross-border payments. For example, Progmat, which develops digital asset issuance platforms like stablecoins, has initiated an international remittance project called "Project Pax" using stablecoins that leverage the existing API framework of SWIFT.

▶Related Articles: Three mega banks also participate, Progmat has launched the international remittance project "Project Pax" utilizing SWIFT with stablecoin.

Furthermore, the improvement of current payment methods, or the significant potential expected from their replacement, is the role of various financial products as payment methods when they are tokenized on-chain.

The U.S. Circle, which issues USDC, the first stablecoin to be circulated in Japan, held a press conference in Tokyo at the end of March. Both co-founder and CEO Jeremy Allaire, who gave the presentation, and Kash Razzaghi, the Chief Business Officer (CBO), who was later interviewed exclusively by CoinDesk JAPAN, emphasized the role of stablecoins in "the future of finance on-chain."

In the United States, MMFs (money market funds) have already been on-chain and are gaining popularity among institutional investors as tokenized MMFs. Institutional investors are replacing their surplus funds with tokenized MMFs to earn yields and immediately converting them back to stablecoins when payment is needed.

Of course, financial services are already highly digitized. Even without using blockchain, the aforementioned things are possible. However, with the existence of tokenization MMF and stablecoins on a single foundation of blockchain, financial services (from the user's perspective, asset management) have become smoother and more efficient.

Stablecoins play a role as the "infrastructure" of on-chain financial services.

The Potential of Stablecoins x Security Tokens

Japan is leading in certain areas of on-chain financial products = the tokenization of finance on a global scale. Security tokens (ST) are issued with underlying assets such as real estate and corporate bonds. They are also referred to as "digital securities."

According to Progmat's "Digital Securities (ST) Market Outlook 2025," the domestic security token market started in 2021 with 4 cases and a total issuance amount of 3.2 billion yen. By the fourth year in 2024, the total number of cases had grown to 51, with a total issuance amount of 148.6 billion yen. It is expected to expand to 94 cases and 341.1 billion yen in 2025. Similarly, BOOSTRY, which operates on an ST basis in a consortium format, also predicts that the issuance scale for the fiscal year 2025 will be around 180 billion yen in its "Comprehensive Report on the Domestic Security Token Market (Fiscal Year 2024)."

Since its emergence, blockchain has been utilized not only as a platform for issuing cryptocurrency but also for various assets such as stocks, bonds, and real estate to be placed on the blockchain (i.e., tokenization). The objectives include expanding the user base through fractionalization, increasing efficiency through smart contracts, capturing the growing number of cryptocurrency users (the integration of cryptocurrency with traditional finance), and improving the efficiency of traditional finance, among others. In some cases, the challenge of new technology may serve as motivation.

However, on-chain payments have not yet been realized in Japan. For security tokens, the Osaka Digital Exchange (ODX) has established "START" as a secondary market, and an expansion of handling is expected. However, currently, with fiat currency (transfers from bank accounts), it takes 2 business days from transaction to settlement (the so-called "T+2"), which creates counterparty risk and limits the efficient use of funds. There are also transfer fees and administrative costs.

The use of stablecoins here, along with Delivery versus Payment (DvP), would enable immediate settlement, achieving "T+0", thereby reducing such risks and various costs. Furthermore, it is expected to not only address the current disadvantages of risk and cost reduction but also to bring about positive effects such as the emergence of new financial products/services and new business developments through the efficient use of funds.

The expanding market size of "tokenization of financial products = tokenization of RWA" globally

According to the data site rwa.xyz, the global value of tokenized RWA was about $20 billion (approximately ¥2.9 trillion, based on an exchange rate of ¥145 per dollar) as of mid-April. Other surveys report figures as high as $50 billion.

〈from rwa.xyx〉Regarding its growth potential, on April 7, Ripple and Boston Consulting Group (BCG) released a report titled "Approaching the Tokenization Tipping Point" concerning the global RWA tokenization market. The tokenized RWA market is projected to grow from $600 billion currently to $18.9 trillion (approximately ¥2740 trillion) by 2033, with an average annual growth rate of 53% (with $9.4 trillion by 2030).

〈From "Approaching the Tokenization Tipping Point"〉The current value is an extremely large figure of $600 billion, but this report includes stablecoins (light blue in the graph) among RWA (since stablecoins are "tokens representing real assets backed by fiat currency").

By the way, rwa.xyz also views stablecoins as RWA and calculates their value, currently estimating the value of stablecoins at 227 billion dollars (approximately 33 trillion yen).

In any case, the tokenization of the RWA market is expected to experience overwhelming growth.

▶Related Articles: RWA tokenization is happening on a scale of trillions of dollars much faster than you think.

There are also reports that demonstrate its potential and possibilities from different perspectives.

According to research published by Binance Research in September 2024, the value of tokenized RWA is over $12 billion, with the on-chain private credit market reaching $9 billion, which is only 0.4% of the traditional private credit market that was sized at $2.1 trillion in 2023. This indicates that there is a vast market available for tokenization, even when looking solely at the private credit market.

▶Related Articles: The market value of tokenized real-world assets (RWA) has surpassed $12 billion.

The Japanese market with great potential and possibilities, but to avoid becoming a Galapagos

The same can be said about the potential and possibilities of the security token market in Japan.

According to a survey announced in July 2023 by the Nissay Foundation for Future Studies and the Value Comprehensive Research Institute, the estimated value of "investment-grade real estate (real estate that institutional investors can expect stable returns from)" in Japan is about 179.0 trillion yen. Atsushi Itaya, Executive Officer of Daiwa Securities Group, previously stated in an interview with CoinDesk JAPAN, "Of that, less than 30% is securitized. In other words, there is more than 100 trillion yen worth of liquidity potential."

According to a survey announced in December 2024, investment-grade real estate has expanded to approximately 194.6 trillion yen.

The utilization of stablecoins in Japan has just begun. Currently, there is a limit of 1 million yen per purchase or transaction for overseas stablecoins like USDC, and there is anticipation for the relaxation or elimination of such restrictions, as well as the emergence of domestic stablecoins without limits.

Although nominal GDP has been surpassed by Germany, Japan boasts the fourth largest economy in the world (some believe this is merely due to the depreciation of the yen, resulting in a decrease in dollar-denominated amounts). Considering the number of tourists visiting Japan, it may be us who are unaware of Japan's potential and possibilities.

In the Japanese market, which is full of potential and possibilities, the security token (digital securities) market, which is expected to grow steadily, and the utilization of stablecoins (SC) in the ST market should become promising use cases.

Furthermore, not limited to the Japanese market, I hope for the day when domestically produced stablecoins and new on-chain financial products/services originating from Japan will make their presence felt in the globally anticipated growth of the RWA tokenization market.