sandmark.com
Japanese financial heavyweights are testing whether blockchain can modernise the country's vast government bond market, launching a trial that uses the Canton Network to enable round-the-clock collateral transfers backed by Japanese government bonds (JGB).
The proof-of-concept aims to assess whether JGBs can be moved and pledged in real time across borders on the Canton Network while preserving their legal status under Japan's existing securities framework. Mizuho Financial Group, Nomura Holdings, Japan Securities Clearing Corporation and US-based Digital Asset Holdings announced the initiative on 20 Apr.
Digital Asset developed the Canton Network, which was designed to let institutions issue and trade financial instruments, including tokenized real-world assets (RWA). Digital Asset counts among its investors BNP Paribas, TradeWeb, Goldman Sachs, DRW, BNY, Nasdaq, S&P Global and iCapital, which itself is backed by BlackRock, Blackstone and JP Morgan.
JGB market
Japan' sovereign debt market totalled about 1,185tn yen ($7.5tn) as of September, making it one of the world's largest pools of high-quality collateral.
The firms said digital JGB collateral could help preserve the bonds' global importance while improving the competitiveness of Japan's capital markets. The country plans 180.7tn yen ($1.1tn) of bond issuance in fiscal 2026, Reuters reported.
The JGB collateral project was selected in February under Japan's Financial Services Agency Payment Innovation Project, according to the companies.
Digital shift
Japan's digital-asset push is entering a more operational phase. Mizuho was among the country's big banks backed by regulators for a stablecoin project aimed at cross-border payments, while Nomura has expanded through its Laser Digital unit into tokenized funds and other institutional digital-asset businesses overseas. JSCC had already been testing digital collateral workflows with DTCC before joining the new JGB initiative.
The Bank of Japan said in March it would experiment with blockchain-based settlement for reserves held by financial institutions, part of a wider effort to connect tokenized infrastructure with existing payment and securities systems.