Japan Taps Blockchain for Real-Time Stock Settlements

Japan's top financial authorities are planning to build a blockchain-based infrastructure for settling stocks and Japanese government bonds. The Financial Services Agency, Ministry of Finance, and Bank of Japan will work with domestic financial institutions starting this summer on a development plan for the next-generation settlement system.

The project aims to reduce settlement times for stocks and government bonds from two days to real-time. A portion of the accounts that banks currently maintain at the Bank of Japan would be tokenized on a blockchain network, according to Nikkei Asia.

The initiative builds on recent regulatory changes in Japan's financial sector. In July, the country passed amendments to its Financial Instruments and Exchange Act that will reclassify about 105 cryptocurrencies as financial instruments from fiscal 2027 and establish the basis for a separate crypto-tax regime with an effective rate of about 20%, down from current rates of as much as 55%.

Japan's securities infrastructure is already testing blockchain applications. The Japan Securities Clearing Corp., a clearing house owned by Japan Exchange Group, began a trial with Mizuho, Nomura, and Digital Asset to explore using Japanese government bonds as blockchain-based collateral.