Key Highlights
- Japan plans to study a blockchain-based payment infrastructure capable of settling stock and Japanese government bond transactions in real time, around the clock.
- The Financial Services Agency, Ministry of Finance, Bank of Japan, and financial institutions are expected to participate in a study group.
- A development plan could be prepared by early 2027, with the system potentially becoming operational in the early 2030s.
Japan is reportedly preparing to study a blockchain-based payment infrastructure that could enable real-time, 24-hour settlement of stock and Japanese government bond transactions.
According to a Nikkei report published on Tuesday, the Financial Services Agency (FSA), the Ministry of Finance, the Bank of Japan (BOJ), and financial institutions plan to form a study group. A development plan could be prepared by early 2027, covering the blockchain’s design, the division of responsibilities among participating agencies and institutions, and a potential implementation roadmap.
If the project moves forward, the system could potentially enter service in the early 2030s. The initiative may also be included in a multiyear strategic-sector investment framework the government plans to establish from fiscal 2027.
Settlement process could move to blockchain
Under the proposed system, a portion of the accounts that banks currently maintain at the BOJ could be converted into digital tokens circulating on a blockchain. The arrangement would function as a form of central bank digital currency limited to interbank payments and distinct from electronic money used by individuals.
Japanese stock trades currently settle two business days after execution, while Japanese government bond transactions generally settle on the following business day. Real-time settlement could allow investors to reinvest proceeds from securities sales without waiting for the existing settlement periods.
Japan’s three largest banks and major securities firms are already conducting a pilot on the management and distribution of tokenized stocks and tokenized government bonds on blockchain networks. The government and central bank initiative is intended to supply the underlying settlement layer for those activities.
Japan considers cross-border applications
The project could also have applications for cross-border payments, according to the report.
Since 2024, the Bank for International Settlements (BIS) has operated a blockchain-based cross-border payment pilot involving central banks from Japan, Europe, and other jurisdictions. Japanese officials view the domestic infrastructure as a potential foundation for that work.
Japanese officials are also concerned about competition in securities tokenization. The U.S. and Europe have made progress in developing tokenized securities infrastructure, raising concerns that Japanese markets could become less attractive to overseas investors if domestic systems do not keep pace.
China is also developing blockchain-based settlement infrastructure for cross-border payments involving Middle Eastern countries.
Japan tightens oversight of crypto platforms
The settlement initiative follows separate regulatory steps targeting cryptocurrency exchanges.
On August 6, the Financial Services Agency and the National Police Agency asked the Japan Virtual and Crypto Assets Exchange Association to implement stricter anti-fraud measures.
The request came in response to an increase in online investment and romance scams conducted through social media. Authorities said victims in such cases have frequently been directed to purchase cryptocurrency and transfer it to external wallets controlled by fraudsters.
The agencies called for broader safeguards at cryptocurrency trading platforms to reduce the use of those systems in fraudulent schemes.
The proposed settlement infrastructure and the anti-fraud measures address different parts of Japan’s digital-asset policy. The settlement project focuses on the potential use of blockchain for securities and payments infrastructure, while the exchange measures target risks associated with cryptocurrency transactions.
The study group is expected to examine the settlement project’s scope and technical requirements before a development plan is considered.
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