Japan is preparing a real-time settlement system for stock and government bond transactions using blockchain technology. Authorities aim to have a project plan ready by early 2027, according to Nikkei.
Instant Settlements
The project will involve the FSA, the Ministry of Finance, the Bank of Japan, and financial sector representatives. This summer, they plan to form a working group to define the blockchain system’s architecture, participant responsibilities, and further development plans.
If the project receives final approval, the infrastructure could be operational in the early 2030s.
Currently, stock settlements in Japan occur two days after a trade, while government bond settlements happen the next day. Blockchain technology is expected to virtually eliminate this delay, allowing sellers to receive funds and reinvest almost immediately after a transaction.
Blockchain Already Being Tested
This is not Japan’s first experiment with the technology. In February, the FSA announced support for a demonstration project where rights to government and corporate bonds, investment funds, and stocks will be recorded on a blockchain, with transactions settled in stablecoins.
The Bank of Japan is also conducting its own experiment using tokenized central bank reserves for blockchain settlements, considering securities settlements among possible scenarios.
This new initiative could elevate these experiments to the level of national infrastructure. In the future, Japanese authorities are also considering using the system for international transfers.
Nikkei noted that the US and Europe lead in tokenizing real assets, and there is a risk that foreign investors and funds might avoid Japanese securities markets if the country’s technology lags behind.
The total volume of the RWA segment (excluding stablecoins) is $38.3 billion, with $15.6 billion attributed to US government bonds.
Earlier, the UK predicted that tokenization could add up to £33 billion annually to the economy over the next decade.
