Japan's Financial Services Agency has made the adoption of blockchain-based on-chain finance a policy priority for its 2026 program year, with plans covering payments, securities settlement, tokenization and cross-border transfers. The regulator outlined the direction in its 2026 Strategic Priorities published on September 15, setting out how it plans to respond to changes in financial markets driven by blockchain and artificial intelligence.
The policy calls for public and private sector testing of on-chain systems while regulators examine the technology, legal framework and supervisory issues involved. The FSA said the work would be carried out while maintaining user protection and financial system stability. Japan's government had already placed on-chain payments and investment in financial infrastructure within a financial strategy adopted in July, and the FSA said it would now work on implementing measures from that strategy.
One central element of the work will involve establishing an 'On-chain Finance Forum for the AI Era,' where officials and industry participants will examine how on-chain finance can be put into practical use. Separate discussions will take place through the Study Group on Digital and Decentralized Finance and the Study Group on Promoting the Sound Use of AI and Related Technologies. The FSA said the process would involve demonstrations and discussions between public and private sector participants to identify unresolved issues before building financial infrastructure designed for usability and competitiveness.
Work on blockchain settlement is already underway in Japan. Four Mitsubishi UFJ Financial Group companies began testing JGB repos on the Canton Network in August, with the proof of concept examining automated processing and 24-hour settlement. The project involves MUFG, Mitsubishi UFJ Morgan Stanley Securities, Mitsubishi UFJ Trust and Banking and MUFG Bank, alongside Digital Asset and Progmat. It was selected for the FSA's Payment Innovation Project, a regulatory initiative designed to test blockchain-based payment and settlement systems.
Private financial groups have been developing tokenization projects in parallel with the regulatory work. SBI Global Asset Management and DigiFT launched a tokenized Japanese equity fund on Solana in July, giving institutional and accredited investors blockchain-based access to a high-dividend Japanese equity strategy. SBI Holdings and the Solana Foundation had days earlier formed a strategic partnership focused on stablecoins, tokenized assets, payments and institutional blockchain services in Japan and other Asian markets. Under that agreement, the Solana Foundation was set to join SBI R3 Japan, a venture involving SBI and Sumitomo Mitsui Financial Group. The company planned to change its name to SBI Solana Global following the required corporate procedures.
On cross-border payments, Japan intends to hold 'Asia Day 2027' during Japan Fintech Week, scheduled for February to March 2027. The event will focus on finance in the digital era and form part of discussions on upgrading cross-border transfers, including through on-chain finance. MUFG Bank, Sumitomo Mitsui Banking Corporation and Mizuho Bank have been preparing joint stablecoin transactions under a common framework, with live activity targeted for fiscal 2026, which ends in March 2027.
Japan has been building a regulatory structure around digital assets at the same time. The country enacted amendments to its financial laws in July that classify cryptocurrencies as financial products under the Financial Instruments and Exchange Act, creating a legal path for changes covering crypto taxation, investment products and market conduct. The FSA followed that restructuring in August by creating a dedicated Cryptocurrency and Stablecoin Division.
In the UK, meanwhile, Britain's Financial Conduct Authority has told crypto firms how its incoming rulebook applies to them, publishing perimeter guidance on Wednesday, two weeks before applications for authorization open. The guidance covers issuing qualifying stablecoins, running trading platforms, dealing and arranging deals, safeguarding cryptoassets and arranging staking, and sets out which activities need FCA approval. The application window runs from September 30 to February 28, 2027, and the regime itself takes effect on October 25, 2027. 'This guidance gives firms the clarity they've asked for so they can prepare with confidence,' said David Geale, the FCA's executive director of consumers, payments and competition.
The rules reach well beyond British-based companies. Parliament extended its territorial scope so that overseas firms dealing with, arranging for or safeguarding cryptoassets for UK retail consumers count as carrying on business in the UK, said Michelle Kirschner, a partner at Gibson Dunn, and the overseas persons exclusion that firms normally rely on 'is simply not available for these activities.' Applying inside the window triggers statutory saving provisions that let a firm keep operating while the FCA assesses it. Miss the February 2027 deadline and a firm not yet authorized by October 2027 is 'likely to be restricted to servicing existing contractual arrangements.'
The FCA will consult in October on how the guidance should change, covering UK qualifying stablecoins, proprietary trading, market making, decentralized protocols, safeguarding arrangements and financial promotions. When the FCA finalized its rulebook in June, it said the regime would reach DeFi where there is an 'identifiable controlling entity,' a term neither the legislation nor the regulator has defined. The FCA has declined to publish worked examples, insisting on case-by-case assessment. 'The hardest questions have been deferred by the FCA rather than resolved,' Kirschner said, though she noted it 'reflects a genuinely difficult perimeter problem that no major jurisdiction has yet cracked.'
Legislation was set out in February, the FCA consulted in April, rules were finalized in June, perimeter guidance arrived this week, the gateway opens this month, and the regime commences in just over a year. The Bank of England, which will supervise systemic stablecoins, replaced individual holding caps with a £40 billion issuance limit in June. 'For boards making multi-year decisions about where to build, that certainty is worth a great deal,' Kirschner said.
