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Japan is preparing to study a blockchain-based settlement system that could enable near-instant transactions in stocks and Japanese government bonds. The Financial Services Agency, Ministry of Finance, Bank of Japan and financial institutions are expected to participate in the initiative.
A study group is expected to begin work this summer and could produce a development plan as early as the beginning of 2027. The plan would address the blockchain’s design, responsibilities among participating institutions and a roadmap for implementation.
Blockchain Could Shorten Settlement Times
Cash settlement for Japanese stock trades currently occurs two days after a transaction, while Japanese government bond trades generally settle the following day. A real-time system could reduce that gap by coordinating the transfer of securities and payment more closely.
The FSA is already supporting a separate proof-of-concept involving Nomura Securities, Daiwa Securities and Japan’s three megabank groups. Its materials cover simultaneous delivery-versus-payment settlement for assets including government bonds, corporate bonds, investment trusts and equities.
The agency is examining how blockchain-based infrastructure could change existing securities settlement processes. The FSA said:
“On-chain DvP could reduce settlement risks and alleviate operational burdens.”
Bank of Japan Tests Tokenized Settlement
The Bank of Japan has separately begun testing tokenized representations of central-bank current account deposits through a distributed-ledger sandbox project. The central bank has said the work could support simultaneous settlement between digital assets through delivery versus payment.
That work could provide a settlement-money component for broader blockchain-based financial infrastructure. However, the reported national settlement plan remains under development and its final technical structure has not yet been decided.
Full System Could Arrive in the 2030s
If formally approved, initial operations could begin before the wider system becomes operational in the early 2030s. The reported infrastructure could eventually also be considered for international remittances.
The project would extend existing Japanese experiments with blockchain from limited proofs of concept toward infrastructure covering major securities markets. For now, the next key step is the proposed study group’s development plan, expected around early 2027.
