Japan is preparing to study a blockchain-based settlement system that could allow stock and Japanese government bond transactions to settle in real time, around the clock, according to a Nikkei report. The Financial Services Agency (FSA), Ministry of Finance, Bank of Japan (BOJ) and financial institutions are expected to form a study group.
A development plan could be prepared by early 2027, with the system potentially going live in the early 2030s. The proposed infrastructure could also support cross-border payments and Japan’s growing tokenized securities market.
Under the proposed system, part of the accounts that banks currently maintain with the BOJ could be converted into digital tokens operating on a blockchain. The arrangement would work somewhat like a central bank digital currency, but it would be restricted to payments between financial institutions rather than being used by consumers.
The change could significantly reduce the waiting time involved in securities settlement. Japanese stocks currently settle two business days after a trade, while Japanese government bonds generally settle on the following business day. A real-time system could allow investors to receive and reinvest money from securities sales without waiting for the settlement cycle to finish.
Japan’s three largest banks and major securities firms are already testing blockchain-based systems for issuing and managing tokenized stocks and government bonds. The proposed government and central bank project would provide the settlement infrastructure needed to support such activity.
The system could also have wider applications. According to the report, Japanese officials see the domestic infrastructure as a possible foundation for cross-border payments. The Bank for International Settlements has been running a blockchain-based cross-border payment pilot involving central banks from Japan, Europe and other regions since 2024.
Japan is also watching developments in the US and Europe, where tokenized securities infrastructure is advancing. Officials are concerned that Japanese markets could become less attractive to overseas investors if the country falls behind.
The proposed blockchain settlement project comes alongside separate efforts to strengthen safeguards around cryptocurrency exchanges. In August, Japanese authorities asked the country’s crypto exchange association to introduce stronger measures against fraud involving digital assets.
The two initiatives address different issues, but together they show Japan taking a broader look at blockchain technology, both for improving financial infrastructure and managing the risks associated with digital assets.
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