STO and Real-Estate RWA in Japan

Tomohiro Iida · Published April 7, 2026 · Updated August 6, 2026

RWA and STO are terms where the technical explanation and the financial-product explanation easily get mixed together.

RWA is a broad way of referring to handling real-world assets and rights in digital form. It is not a single legal category. Even for the same real-estate token, the rules that apply and the licensed parties you need change with the rights the investor holds, the way it is issued, who it is sold to, and how it is transferred.

This article gathers the practical questions a company considering an STO or a real-estate RWA in Japan should settle before issuance. For the legal assessment of any specific deal, consult professionals such as a lawyer, a financial instruments business operator, a trust bank, or a tax accountant.

Start by defining what is being tokenized

Before selecting technology, put into words the rights that investors or users acquire. Choosing a platform or a chain before that is settled makes any later reversal expensive.

• Shares
• Corporate bonds
• Interests in investment trusts and funds
• Trust beneficiary interests
• Rights in the real estate itself
• The right to receive a share of income
• Membership and usage rights
• Points
• Rights exchangeable for goods or services
• Proof of ownership or authenticity

Even among tokens on the same blockchain, the legal treatment differs: securities, crypto-assets, electronic payment instruments, prepaid payment instruments, and NFTs are handled in different ways.

Do not turn a request to issue an RWA straight into system requirements. Confirm the rights and the flow of money behind the request first.

RWA (real-world asset tokenization) basics

What an STO is

STO is used as an abbreviation of security token offering, referring to issuing and transferring rights that qualify as securities through electronic arrangements such as a blockchain.

In Japan, security tokens, including electronically recorded transferable rights, are handled within the framework of the Financial Instruments and Exchange Act. Solicitation, sale, intermediation, custody, and disclosure require regulatory handling that depends on the type of right and the way it is traded.

Writing the code that issues a token does not, by itself, make an STO.

Related official information

Financial Services Agency: notice on the requirements set under Article 51-3, paragraph 1, item 2 of the Order for Enforcement of the Income Tax Act, and related matters（日本語）April 1, 2024. A notice setting the requirements for the specified method of custody, for tax purposes, of corporate bonds that fall under electronically recorded transferable rights.

Financial Services Agency: publication of draft cabinet orders and cabinet office ordinances under the 2023 amendments to the Financial Instruments and Exchange Act and related legislation（日本語）June 27, 2024. A review of security-token-related provisions is listed as one of the main items. The public consultation on the drafts has closed.

Japan Security Token Offering Association（日本語）Self-regulatory rules and member information.

Rules are amended over time. Check whether the content above is current at the point you are considering a deal, using the official sources and the advice of professionals.

Common structures for real-estate RWA

Real estate is not necessarily replaced by an ownership right recorded directly on a blockchain. In practice, trusts, special purpose companies, and funds are used so that the income or the beneficiary interest arising from the property is designed as an investment product.

• Who owns the real estate
• Whether a trust is used
• The rights the investor acquires
• How rent and sale proceeds are distributed
• Who is responsible for managing the property
• The appraisal and valuation method
• Disaster, vacancy, and repair risk
• Early sale and redemption conditions
• Who the holding can be transferred to, and secondary distribution
• Tax and accounting

Saying that the property can be divided into small units does not give an investor enough information to make a decision.

Real-estate RWA in Japan: examples and rules

The parties involved in an issuance

This varies from deal to deal, but the following parties may be required.

Issuer and asset holder

Decides which rights are issued, what the raised funds are used for, and what is promised to investors.

Arranger and asset manager

Handles product design, asset selection, management, and reporting.

Trust bank and trustee

Where a trust is used, is involved in custody of the assets, the beneficiary interest, and holder information.

Financial instruments business operator

Depending on the activity — public offering, private placement, sale, intermediation, secondary distribution — a registered operator is involved.

Platform and ledger provider

Provides the technical base for token issuance, transfer, holder management, and event processing.

Custody and wallet providers

Manage private keys, accounts, and the link between holders and addresses.

Lawyers, accountants, and tax accountants

Confirm legal classification, contracts, disclosure, accounting, and tax.

Leaving the roles vague means that, when something fails or a transfer is misdirected, nobody knows who responds. Decide the owner and the escalation path in advance, in both the contracts and the operating procedures.

Ten points to confirm before issuance

Having answers at the planning stage makes the conversation with professionals concrete. Where an answer does not emerge, keep the item recorded as an open question.

• Legal classification: what rights the investor acquires, and which laws and self-regulatory rules are involved.
• Investor scope: who the instrument is sold to — general investors, professional investors, corporations, residents of Japan.
• Solicitation and sale: who carries out the offering, solicitation, and intermediation, and how far a website or social account can go in explaining it.
• Disclosure: how risks, fees, operating status, asset valuation, and conflicts of interest are disclosed.
• Identity verification and AML/CFT: how investors and wallets are linked, and how illicit transactions and sanctioned parties are checked.
• Keys and custody: who holds the private keys, and how loss, leakage, inheritance, and organisational change are handled.
• Transfer of rights: whether on-chain transfer matches the legal register of holders.
• Settlement: which method is used — fiat currency, bank transfer, stablecoin, tokenized deposit — and how the trade and the settlement are synchronised.
• Secondary distribution: how the buyer side, exchanges or proprietary trading systems, price formation, liquidity, and transfer restrictions are designed.
• Termination and failure: how redemption, forced transfer, freezing, a halted chain, service termination, and provider insolvency are handled.

What to look at when comparing platforms

Comparing only on which blockchain is used leaves the post-issuance operation out of view. Line up the following criteria.

Product coverage

Whether it can handle the instruments in question, such as real estate, corporate bonds, funds, or shares.

Legal and operational integration

Whether it has a track record of connecting with financial instruments business operators, trust banks, and holder management.

Permission design

Whether the authority to issue, transfer, freeze, redeem, and correct can be separated.

Personal data

How on-chain and off-chain information are separated.

Interoperability

Whether it can connect to other ledgers, settlement rails, and existing securities systems.

Auditability

Whether you can confirm who executed what, and when.

Business continuity

Whether rights can be maintained or migrated if the platform stops.

Cost

Whether you compare total cost including initial build, issuance, holder management, maintenance, legal work, distribution, and audit.

Look at fit with the rights structure and operating conditions of the deal rather than at rankings. Features and availability change, so check each provider’s official information at the time you compare.

Comparing STO issuance platforms

A secondary market existing is not the same as being able to sell

Security tokens have secondary-trading arrangements such as proprietary trading systems. In Japan, START, operated by Osaka Digital Exchange, is one domestic example. The issues handled, the range of investors who can take part, and which securities firms participate all change, so check the official information at the point you are considering it.

Osaka Digital Exchange（日本語）

Even where a venue for trading exists, there is not always a sufficient buyer.

What investors need to be told

• The hours during which a sale is possible
• Which securities firms can take part
• How orders are placed
• Price movement
• The possibility that a trade does not execute
• Fees
• Transfer restrictions
• The possibility of holding until redemption

Avoid wording that guarantees liquidity. Explaining on the assumption that the holding can be sold leaves you unable to account for the case where it cannot.

What to verify in a PoC

A PoC run before a financial product is actually offered may use mock tokens or a restricted environment. Using a mock environment does not necessarily remove statutory procedures, however. Before you start, confirm with a lawyer or a financial instruments business operator whether the design of the verification amounts to offering, solicitation, or sale.

• The rights model
• Registration of KYC-verified wallets
• Issuance, transfer, freezing, and redemption
• Misdirected transfers and recovery
• The investor-facing screens
• Reconciliation with the register of holders
• Distributions and interest payments
• Audit logs
• Response when something fails
• Operational workload
• Conditions for moving to production

What matters is that the success condition for a PoC is not simply that a token could be sent.

Setting exit criteria before starting a PoC

How to run a PoC

What Netsujo covers

When Netsujo is asked about an RWA or an STO, we start by organising the rights, the parties, the applicable rules, operations, settlement, and the exit conditions.

In areas that cannot be settled by technical verification alone, we work on the basis of a division of roles with professionals such as financial instruments business operators, trust banks, and lawyers.

Whether to adopt a blockchain at all is decided after that work. Where an existing system or central management is the better fit, we say so and set out that option.

Web3 consulting

PoC support

Token economy design: four elements and three enterprise patterns