Japan plans blockchain settlement network for stocks and government bonds

Japan moves toward near-instant settlement for stocks and bonds

Japan's Financial Services Agency, Ministry of Finance and Bank of Japan are planning a national blockchain-based settlement system for stocks and Japanese government bonds, according to a Nikkei report published Wednesday. A blockchain is a shared digital record where transactions are logged so they are hard to alter.

The three authorities plan to launch a working group this summer, with the aim of starting development by early 2027.

The plan at a glance

• Regulators, the Bank of Japan (BOJ) and major financial institutions want a shared network for settling stock trades and Japanese government bonds (JGBs).
• Work would begin by early 2027. If the project is formally approved and testing goes well, operations could start in the early 2030s.
• Banks would convert part of the reserve accounts they hold at the BOJ into digital tokens, creating a wholesale central bank digital currency (CBDC) — a digital form of central bank money used only between financial institutions, not by individuals.
• Stock trades in Tokyo currently settle two business days after execution, and JGB trades settle the following day. The new system would cut both to nearly zero.
• A survey by Nomura and Laser Digital, published in April, found nearly 80% of Japanese institutional investors plan to put money into crypto within three years.

How the proposed system would work

All banks in Japan use reserve accounts at the BOJ to settle payments between each other. Under the plan, a portion of those balances would become digital tokens on the blockchain network.

Because the tokens would move instantly between institutions, the time it takes to finalize a trade — known as settlement — would fall to near zero. Investors could then reinvest proceeds from a sale almost immediately instead of waiting one or two business days.

Existing projects the plan builds on

The idea follows earlier work by Japan's largest banks. MUFG said earlier this month that it is preparing a proof of concept — a small-scale test — for on-chain JGB settlement using the Canton Network. MUFG, SMBC and Mizuho, the country's three largest banks, are already running a pilot on tokenized stocks and JGBs. Tokenization means turning assets into digital tokens recorded on a blockchain.

The BOJ expanded its blockchain settlement sandbox, a safe and isolated testing environment, in March. The expansion supports its CBDC work, including making new systems compatible with existing interbank and securities settlement infrastructure.

The BOJ also takes part in Project Agorá, an initiative led by the Bank for International Settlements (BIS) that brings together seven central banks and more than 40 financial institutions to test tokenized cross-border payments. According to the report, Japan's planned settlement infrastructure could serve as a foundation for that effort.

What is confirmed and what is still undecided

The Nikkei report, the pilots run by the major banks, the BOJ's sandbox expansion, the April survey and the current settlement times are documented in the source material.

Formal approval of the new system has not been granted. The projected start of operations in the early 2030s applies only if the project is approved and testing succeeds. Details such as the final technical design are not yet settled.

Why Japan is moving now

Nikkei said Japan could lose institutional investors and foreign capital to other jurisdictions as the United States and Europe modernize their capital markets through tokenization, and as Wall Street pushes toward 24/7 tokenized stocks. Faster settlement would let investors redeploy money quickly, which supporters see as important for keeping trading activity in Japan.

What happens next

The working group involving the FSA, the Ministry of Finance and the BOJ is planned to launch this summer. Development is then expected to begin by early 2027.

Sources

• CoinDesk
• Nikkei Asia