MUFG and Progmat Begin Proof-of-Concept for Tokenized Investment Trusts in Real Environment

Key Points of This Article

• The aim is to accumulate practical knowledge without soliciting or selling to external investors.
• On-chain management of beneficial rights records is planned while maintaining the face value display.

Testing Tokenized Investment Trusts in a Real Environment

Mitsubishi UFJ Asset Management, Mitsubishi UFJ Morgan Stanley Securities, Mitsubishi UFJ Trust and Banking, and Progmat announced on the 3rd that they established a fund on August 31 for the purpose of a proof-of-concept for a domestically registered (established and operated under Japanese law) tokenized investment trust.

The entire process of management, trust, rights management, and system operation will be verified while operating in a real investment environment. The investment trust is not just set up and left; operations such as calculating the net asset value, additional settings, and partial redemptions will continue.

The verification will not only focus on the issuance of tokens but also on whether it can be continuously operated as a financial product in practice.

The purpose of this fund is to accumulate practical knowledge regarding its formation and operation. There will be no solicitation or sale of beneficial rights to institutional or individual investors. This is the first domestically registered tokenized investment trust in Japan (according to Mitsubishi UFJ Asset Management).

Tokenized investment trusts refer to a system that handles the beneficial rights of investment trusts (the rights of investors to receive the fund's operational results) on the blockchain. This includes not only the issuance of beneficial rights as tokens but also the on-chain recording and management of rights. Overseas, the market size of tokenized money market funds (MMFs) is expanding, becoming one of the core products in the digital asset market.

On-Chain Management of Records While Maintaining Face Value Display

In this case, the rights of investment trust beneficial rights will be displayed on the face value (paper securities), and the management of the beneficial rights records, which records who holds how many shares, will be conducted on the blockchain. This will start with the first phase of on-chain management of the records.

The four companies announced that they will begin collaborating on December 4, 2025, to prepare the infrastructure for the commercialization of tokenized investment trusts, progressing with the examination of product schemes, legal organization, and business flow construction. The establishment of this fund is the next stage in that process.

Issues with Face Value in Investment Trust Law and System Development

According to Tatsuya Saito, CEO of Progmat, the key issue in tokenizing domestically registered investment trusts is the handling of face value. Article 6, Paragraph 1 of the Investment Trust and Investment Corporation Law (Investment Trust Law) stipulates that beneficial rights that are divided must be displayed with beneficial securities for entrusted investment trusts.

When using the transfer system of the Corporate Bond and Stock Transfer Act (Shahou Law), electronic management that eliminates paper securities becomes possible regardless of the provisions of the underlying law.

On the other hand, for non-transferable securities that do not use the transfer system, the feasibility of paperless management is left to the underlying law. While the Companies Act and Trust Act have options not to issue face values, the Investment Trust Law does not have provisions that permanently allow this. If face values are issued, transferring tokens between wallets does not complete the legal transfer of rights.

The location of the "face value issue" in domestic securities (Source: Note by Tatsuya Saito of Progmat)

The Digital Asset Co-Creation Consortium (DCC), which is managed by Progmat, will publish an "Interim Summary on Tokenization Law" in April 2026, proposing a revision of Article 6 of the Investment Trust Law as a short-term legal development.

It aims to enable the choice not to issue beneficial securities in trust contracts and to establish regulations for the management of records regarding beneficial rights without face values, including the procedures for transfer and requirements for asserting rights against third parties (counterclaims).

Moreover, the idea of managing rights as data is also shared in government bonds. At WebX2026 on July 14, it was clarified that the initiative to handle existing Japanese government bonds on the blockchain is not about issuing new assets but about managing rights transfers on-chain. How to align with the hierarchical structure of the transfer system is raised as an implementation challenge.

The four companies, including Mitsubishi UFJ Asset Management, plan to gradually expand the scope of verification following the establishment of this fund. They aim to include the expansion of offerings to external investors and the enhancement of on-chain financial services through collaboration with stablecoins and tokenized deposits handled on the blockchain.

Regarding the relationship between system development and practical operation, Saito stated, "I believe that 'practical operation' and 'system development' should be a reciprocal movement in Japan as well."

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