Japan is preparing real-time blockchain settlement for stocks and government bonds, the business daily Nikkei reported. A joint study group involving the Financial Services Agency (FSA), the Ministry of Finance and the Bank of Japan is set to begin work this summer.

Settlement refers to the stage after a trade is completed, when the security and the money actually change hands. In Tokyo, that process currently takes two trading days for stocks and one trading day for Japanese government bonds. Until settlement is finalized, the transaction remains open, leaving both sides exposed to counterparty risk. During that period, the open position also ties up capital that is released only after settlement. A shared blockchain infrastructure would reduce that waiting time to near real time. Private financial institutions are also participating alongside the three authorities.

The group is not expected to produce a development plan until early 2027 at the earliest. If the project receives formal approval, operations could begin within a few years, which would place the completed system in the early 2030s.

Study Group to Design Japan’s Blockchain Settlement for Securities

The first task for the study group is to determine what such an infrastructure should look like. Its members include the FSA, which acts as the financial regulator, the Ministry of Finance, which issues government bonds, and the Bank of Japan. In other words, supervision, issuance and monetary policy will be represented at the same table. Market institutions are also taking part.

The development plan will define the design of the blockchain and divide responsibilities between authorities and participating institutions. It will also include a roadmap for the next stages of work.

An immediate system change is therefore not imminent, since actual development would begin only after formal approval. The system could later be extended to international transfers, although the scope of that possible expansion is still unclear. The long timeline also sets the project apart from pilot programs already underway at Japanese banks, while giving regulators and market participants time to work through operational and legal questions before any rollout.

For now, the current settlement periods of two and one trading day remain unchanged. Those timelines require collateral and liquidity to be tied up overnight. Real-time settlement would largely eliminate that buffer, because the securities and the payment would be available at the same moment. That would reduce counterparty risk in trading and free up capital for banks. It would also change liquidity management, since money and securities would need to be available at all times. These are the issues the study group must now examine.

JSCC Already Tests Government Bonds as Digital Collateral

A more concrete initiative has been underway since April 2026. The Japan Securities Clearing Corporation (JSCC), the central counterparty in Japanese securities trading, stands between buyers and sellers in clearing and guarantees that both sides meet their obligations. To do that, it requires pledged assets, known as collateral.

JSCC is now testing Japanese government bonds as digital collateral. The project involves Mizuho Financial Group, Nomura Holdings and Digital Asset Holdings, and it runs on the Canton Network. In February 2026, the FSA added the project to its Payment Innovation Project.

The proof of concept covers real-time collateral transfers as well as cross-border settlement. Participants are also checking legal compliance under Japan’s Book-Entry Transfer Act and the Financial Instruments and Exchange Act. The test phase is scheduled to run until September 2026.

Those involved say the effort is a response to similar infrastructure tests abroad, especially in the United States. As a result, collateral management for government bonds is being treated as an urgent priority.

The underlying market is large. Japan’s outstanding government bonds and bills total around 1,166 trillion yen, or roughly $7 trillion. At the same time, the yield on 10-year Japanese government bonds is near a multi-decade high at about 2.9%, while 30-year paper yields more than 4%. As yields rise, the market value of existing bonds falls. That means anyone posting them as collateral must top them up more often, making efficient collateral management increasingly important.

Crypto Assets Move Into Japanese Securities Law

Japan is also changing the legal framework for cryptocurrencies. Parliament passed an amendment to the Financial Instruments and Exchange Act in July 2026. Until now, cryptocurrencies in Japan were mainly covered by the Payment Services Act, which focuses on payments. Under the new rules, they will fall under the same rulebook as stocks and bonds.

The new framework applies to crypto assets listed on registered Japanese exchanges, including Bitcoin and Ether. However, the reclassification will not take effect until fiscal year 2027.

For investors, the biggest change is taxation. From the start of 2028, a 20% tax rate is set to apply, compared with as much as 55% previously. The amendment also opens the door to regulated crypto ETFs in Japan, although no approval date has been set.

The regulator has also reorganized internally. In early August 2026, the FSA launched a dedicated Cryptocurrency and Stablecoin Division within its Asset Management and Insurance Supervision Bureau. The division is split into three offices covering crypto oversight, innovation promotion and digital payments planning, bringing supervision and rulemaking for the sector under one umbrella.

Megabanks Develop a Joint Yen Stablecoin in Parallel

Japan’s megabanks are advancing a separate payments project in parallel. Mizuho Bank, MUFG and SMBC have been running a pilot for a joint stablecoin under FSA supervision since November 2025. Stablecoins are tokens that remain pegged to a currency. Mitsubishi Corporation is also participating, along with Progmat, the blockchain platform built by MUFG and NTT Data.

The consortium plans to issue the token by the end of fiscal year 2026, initially pegged to the yen. A dollar version is expected to follow later. Under the name Project Pax, the group is targeting transaction volume of 1 trillion yen by 2028, referring to payments between companies.

The overlap among the participants is notable. Mizuho is involved in both the government bond test and the stablecoin pilot, while Nomura is also participating in the JSCC project. The circle of institutions building Japan’s blockchain infrastructure therefore remains relatively small.

Outside the megabanks, deposit tokenization is also continuing. In this model, a blockchain token represents the balance in a bank account. Several dozen companies support the deposit token DCJPY from DeCurret DCP. Japan Post Bank also plans to tokenize savings deposits in fiscal year 2026, while SBI Shinsei Bank is considering a DCJPY issuance through Partior, a joint venture with JPMorgan participation.

Japan’s blockchain infrastructure is therefore taking shape through several parallel channels, even as the joint study group is only just beginning its work.