A consortium of Japan's largest financial institutions, including the country's three megabanks and global asset managers such as BlackRock, has announced concrete plans to launch a 24/7 trading system for tokenized government bonds by the end of 2025, with full implementation expected within 2026. The initiative, first reported by Nikkei, aims to modernize the bond market infrastructure through blockchain technology and stablecoin-based settlement, enabling same-day (T+0) settlement for the first time in Japan's government bond market.
The core of the project centers on Progmat, a stablecoin platform operated by Mitsubishi UFJ Financial Group (MUFG). A development organization scheduled to launch in May 2026 includes Japan's three megabanks—Mitsubishi UFJ Bank, Sumitomo Mitsui Banking Corporation, and Mizuho Bank—alongside Tokio Marine Holdings, Daiwa Securities, SBI Securities, BlackRock Japan, and State Street. This broad coalition signals strong institutional backing, while the involvement of BlackRock and State Street highlights growing global interest in Japan's digital securities market.
The initial focus will be on the repurchase agreement (repo) market, where financial institutions borrow and lend short-term cash against collateral. Japan's repo market accounts for approximately 10% of the $16 trillion global market. By tokenizing these instruments, the consortium aims to reduce settlement risk, improve capital efficiency, and allow 24/7 trading outside traditional hours. Transactions would shift from the current T+1 settlement cycle to instant T+0 settlement using yen-pegged stablecoins, freeing up capital currently tied up in overnight settlement processes.
Separately, Japan Securities Clearing Corporation, Nomura Holdings, and Mizuho Financial Group have launched proof-of-concept trials on the Canton Network to test blockchain-based collateral management and onchain transfers of Japanese government bonds. This pilot, selected under Japan's Financial Services Agency Payment Innovation Project, complements the Progmat-led effort. Meanwhile, the Bank of Japan has intensified its own blockchain-based settlement experiments, with Governor Kazuo Ueda announcing tests for commercial bank reserve settlements.
These moves place Japan among the most aggressive major economies pursuing blockchain-based modernization of sovereign debt markets. If successful, the tokenized bond system could serve as a model for other countries exploring digital securities and stablecoin-based settlement. However, analysts caution that significant legal, tax, operational, and regulatory questions remain unresolved before tokenized government bonds can operate at full institutional scale. The consortium plans to release formal recommendations covering these issues later this year.
