Japan is getting ready to explore a blockchain settlement system that can process stock and government bond transactions 24/7, as per a report from Nikkei on Aug. 26.
The Financial Services Agency, Ministry of Finance, Bank of Japan, and participating financial institutions are set to form a study group in the summer of 2026. The group aims to finalize an initial development plan by early 2027.
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As of Wednesday, none of the three government institutions had officially confirmed the establishment of the study group mentioned in the report.
Japan’s blockchain settlement initiative targets current delays
Currently, Japanese stock transactions follow a T+2 settlement cycle, where cash settlement occurs two business days after a trade. Government bond transactions in Japan typically settle on the next business day.
The proposed blockchain infrastructure aims to streamline the connection between securities transfer and cash payment. This would enable investors to access sale proceeds quicker and potentially reinvest the funds almost immediately.
The development plan will cover aspects such as the blockchain architecture, roles of public and private participants, and the implementation timeline of the system. It could also potentially extend to international remittances as another use case.
If the plan receives formal approval, the infrastructure could be operational in the early 2030s, although no final decision on implementation has been announced yet.
Real-time settlement can reduce the exposure period between counterparties. However, it also poses new liquidity and operational requirements for market participants by reducing settlement delays.
BOJ is already experimenting with central-bank money on blockchain
The reported initiative builds upon ongoing experiments by the Bank of Japan. Governor Kazuo Ueda mentioned in March that the central bank was testing settlements using commercial banks’ current account deposits on blockchain infrastructure.
The sandbox project is exploring how blockchain networks can integrate with existing systems, with potential use cases including domestic interbank transfers and securities settlement.
BOJ Executive Director Kazushige Kamiyama described the work as an examination of tokenized central-bank account deposits, which could support delivery-versus-payment settlement.
Separately, Japan continues technical research on a retail central bank digital currency, although no decision has been made on its issuance.
Tokenized securities operations in Japan
The private financial sector in Japan has already developed blockchain platforms for regulated securities. Progmat recently moved ¥452 billion in managed tokenized securities to an Avalanche network.
SBI Holdings and Startale are collaborating on Strium, a blockchain designed for round-the-clock tokenized securities trading. A public test network is expected in 2026.
While these private systems focus on tokenized assets, the government’s proposal has broader implications as it could involve mainstream Japanese stocks, government debt, and central-bank money.
Japan’s three largest banks are also working on a shared yen stablecoin framework, aiming for live transactions by March 2027 following an FSA-supported corporate payment pilot.
The 2027 plan will shape the project’s direction
The study group must decide whether to create a new blockchain, connect existing regulated networks, or integrate distributed ledgers with current market systems.
Key considerations include governance, cybersecurity, transaction privacy, operational resilience, and procedures for addressing errors or unauthorized transfers. Operating 24/7 would require ongoing support from financial institutions and regulators beyond current market hours.
The next milestone will be an official announcement naming the participating institutions and outlining the study group’s mandate. The early-2027 development plan should detail the technical architecture, funding, testing phases, and any necessary legislative changes.
Until these documents are released, the reported targets for launch in the early 2030s remain speculative rather than official government deadlines.
