Japan’s Major Banks Launch On-Chain Government Bond Pilot on Canton Network

Major Japanese financial institutions have begun testing blockchain-based trading of government bonds, marking a broader push to bring tokenized traditional assets into institutional finance.

Crypto media outlet The Coin Republic reported on April 21 that four institutions — Mizuho Financial Group Inc., Nomura Holdings Inc., Japan Securities Clearing Corp. and Digital Asset — are conducting a pilot project for blockchain-based government bond transactions. The project is being built on the Canton Network.

The pilot is focused on verifying a framework for issuing and transferring government bonds on-chain. It will test whether the model can improve on existing systems by enabling round-the-clock trading and real-time collateral transfers.

The project could also streamline the administrative work involved in posting and replacing collateral between institutions, reducing operating costs. In the current system, settlement and collateral transfers across multiple institutions are complex and time-consuming.

The tokenized government bonds issued in the test will be treated as official securities, the same as conventional bonds. Their legal status will remain unchanged despite the use of blockchain technology.

Japan’s Financial Services Agency is backing the project and plans to examine whether regulatory changes are needed. The pilot is scheduled to run through September, with the outcome potentially shaping whether the framework is adopted in practice.

Global financial institutions are pursuing similar efforts as well. Some large banks and financial infrastructure providers are reported to be testing the tokenization of government bonds and collateral assets on the same network.