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Japan is moving toward developing a blockchain-powered settlement infrastructure for real-time settlement of stock and bond transactions, according to a report published on Tuesday.
Blockchain-Powered Infra to Trade Stocks
The Financial Services Agency, the Ministry of Finance, the Bank of Japan, and several financial institutions are preparing to kick off a study group in the summer, reported Nikkei.
The objective is to develop a comprehensive strategy by early 2027, covering blockchain design, the allocation of responsibilities among relevant agencies and institutions, and a roadmap for future work.
Subject to approval, the system could be up and running within a few years, potentially becoming operational in the early 2030s. The initiative might be part of a strategic sector investment framework that the government is planning to set up from fiscal 2027.
Part of the current accounts that banks maintain at the Bank of Japan would be transformed into digital currency, or tokens, that would circulate on a blockchain. The proposed system would tokenize part of banks’ deposits at the Bank of Japan for use in blockchain-based settlement, rather than creating a retail digital currency for consumers.
Japan’s leading three banks and major securities firms are already conducting a pilot project on the management and distribution of tokenized stocks and tokenized Japanese government bonds on blockchain networks. The government and the Bank of Japan’s initiative would provide a settlement infrastructure to bolster such endeavors.
Japan’s Broader Digital Finance Push
Japan’s push toward blockchains appears to be part of a broader wave of changes sweeping the country’s digital finance sector.
The country’s parliament officially passed a landmark law amendment last month, reclassifying cryptocurrencies as “financial assets,” Reuters reported. The move puts cryptocurrency in the same legal category as stocks and other financial instruments.
In October of last year, Japan launched JPYC, the world’s first yen-pegged stablecoin, signaling a broader global move toward regulated digital currencies even in traditionally cash-dominant markets.
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