On September 30, Japan’s Ministry of Finance announced the establishment of the “Study Group on Using Blockchain to Address Japanese Government Bond (JGB) Issues,” and the first closed-door meeting will be held on October 8. Many people see “Ministry of Finance + blockchain” and immediately assume it’s a positive development. The official explanation, however, is very clear: this is an assessment, not a decision to put anything on-chain.
First, let’s lay out the facts. The research group has five members: Akiyuki Kato, Akira Kamo, and Noriyuki Yanagawa from the University of Tokyo; Jousuke Shinohara from Waseda University; and Chotaro Morita from All Nippon Asset Management. The Bank of Japan and the Financial Services Agency will attend as observers, and the Secretariat is within the Ministry of Finance. The planned discussion points are to be compiled between December 2026 and January 2027.
There is only one core issue: JGBs are currently settled on T+1. Can settlement be changed to on-chain, immediate settlement. The outstanding amount of Japanese government bonds and treasury discount bills is about 11,667 trillion yen—an order of magnitude comparable to a market of around 70 trillion US dollars.
The points of disagreement are very specific, and it’s not a case of “traditional versus innovation.”
Supporters: On-chain could enable near-simultaneous Delivery-versus-Payment (DvP). Counterparty exposure would be reduced to nearly zero, and collateral and cash could be reused on the same day, improving efficiency in the repo market.
Opponents: The reason T+1 works right now is that it relies on end-of-day net settlement—everyone nets positions first, then settles only the net amount. If it were changed to immediate, trade-by-trade settlement, the netting would disappear, meaning that at the moment of each transaction, the full amount of cash and securities would have to be made available. For a sovereign bond market with enormous daily volumes, that implies liquidity demand would rise multiple times, and financing costs could end up being higher.
So, I tend to think the real dividing line isn’t the technology—it’s “who will bear the liquidity cost of eliminating net settlement.” Institutions may welcome immediate DvP, but they would certainly oppose sacrificing net settlement. If it ultimately becomes a hybrid model of “immediate settlement + off-chain net settlement,” then the purpose of putting this on-chain would amount to nothing more than the clearinghouse switching to a new interface.
Also note that the authorities have explicitly stated that this does not mean moving government bond trading onto the chain. The meeting minutes and related materials will be released promptly. Don’t treat this study group as a roadmap—it hasn’t even drawn a route yet.
What do you think: if immediate settlement comes at the cost of giving up net settlement, would institutions issuing debt agree to it? #JapanMinistryOfFinanceEstablishesStudyGroupOnTokenizationOfGovernmentBonds
First, let’s lay out the facts. The research group has five members: Akiyuki Kato, Akira Kamo, and Noriyuki Yanagawa from the University of Tokyo; Jousuke Shinohara from Waseda University; and Chotaro Morita from All Nippon Asset Management. The Bank of Japan and the Financial Services Agency will attend as observers, and the Secretariat is within the Ministry of Finance. The planned discussion points are to be compiled between December 2026 and January 2027.
There is only one core issue: JGBs are currently settled on T+1. Can settlement be changed to on-chain, immediate settlement. The outstanding amount of Japanese government bonds and treasury discount bills is about 11,667 trillion yen—an order of magnitude comparable to a market of around 70 trillion US dollars.
The points of disagreement are very specific, and it’s not a case of “traditional versus innovation.”
Supporters: On-chain could enable near-simultaneous Delivery-versus-Payment (DvP). Counterparty exposure would be reduced to nearly zero, and collateral and cash could be reused on the same day, improving efficiency in the repo market.
Opponents: The reason T+1 works right now is that it relies on end-of-day net settlement—everyone nets positions first, then settles only the net amount. If it were changed to immediate, trade-by-trade settlement, the netting would disappear, meaning that at the moment of each transaction, the full amount of cash and securities would have to be made available. For a sovereign bond market with enormous daily volumes, that implies liquidity demand would rise multiple times, and financing costs could end up being higher.
So, I tend to think the real dividing line isn’t the technology—it’s “who will bear the liquidity cost of eliminating net settlement.” Institutions may welcome immediate DvP, but they would certainly oppose sacrificing net settlement. If it ultimately becomes a hybrid model of “immediate settlement + off-chain net settlement,” then the purpose of putting this on-chain would amount to nothing more than the clearinghouse switching to a new interface.
Also note that the authorities have explicitly stated that this does not mean moving government bond trading onto the chain. The meeting minutes and related materials will be released promptly. Don’t treat this study group as a roadmap—it hasn’t even drawn a route yet.
What do you think: if immediate settlement comes at the cost of giving up net settlement, would institutions issuing debt agree to it? #JapanMinistryOfFinanceEstablishesStudyGroupOnTokenizationOfGovernmentBonds