Japan LDP orders five-year roadmap for on-chain finance

Japan’s ruling Liberal Democratic Party approved a plan asking the Financial Services Agency to develop a five-year roadmap for on-chain finance, including bank-issued stablecoins and tokenized deposits, to protect yen sovereignty and expand payment infrastructure.

The plan asks regulators to clarify how tokenized money could be used for payroll, tax payments, corporate funding and cross-border transfers. It requests study of tokenized current account deposits and a wholesale central bank digital currency.

The roadmap request was drafted by an LDP digital policy working group chaired by lawmaker Seiji Kihara after meetings this year with banks, stablecoin issuers, tokenization firms, regulators and academics. The party’s Policy Research Council approved the proposal this week.

The proposal calls for common rules across the region for tokenized assets, audits, know-your-customer checks, anti-money-laundering controls and counter-terrorist financing standards.

Regulatory work outlined in the plan includes a review of bank-issued stablecoins, an assessment of cross-border use of yen stablecoins and an examination of a common clearing framework for tokenized deposits. The central bank is asked to consider tokenized current account deposits and to examine wholesale CBDC designs to determine whether a central bank-issued ledgered account could complement or substitute private tokenized deposits for interbank settlement.

Japan’s three largest banks — MUFG Bank, Sumitomo Mitsui Banking Corp. and Mizuho Bank — received approval for a stablecoin proof-of-concept to test whether regulatory and operational requirements can be met when multiple banks jointly issue a stablecoin. The banks plan a commercial launch in March 2026 if the trial succeeds. The pilot will focus on legal, operational and compliance frameworks.

Joshua Chu, a lawyer and co-chair of the Hong Kong Web3 Association, described the approach as treating regulated money movement and market structures ‘wrapped in code.’ Samar Sen, head of international markets at Talos, described the three-bank initiative as a bank-led effort that can move pilots into core infrastructure. Wish Wu, CEO of Pharos, noted that Singapore and Hong Kong have more live tokenization and stablecoin operations and said Japan’s outcome will depend on how quickly it translates policy and pilots into large-scale use.

Al Qureshi, CEO of Black Lake, described stablecoins as ‘a programmable layer for money movement and liquidity distribution’ that could speed settlement and create new channels for monetary policy transmission. Max Grabner, head of product at Range, urged regulators to clarify how banks should account for stablecoins and warned that tokenized deposits will require a shared clearing layer for efficient interbank settlement.

Officials and market participants flagged practical constraints such as legacy banking systems, manual processes and institutional inertia. Observers noted that wider foreign adoption of tokenized assets could affect demand for Japanese government bonds.

Next steps call for the Financial Services Agency to produce the requested roadmap and for central bank officials to study technical and legal issues around tokenized deposit accounts and wholesale CBDC options. The approved plan sets a five-year horizon for regulatory and operational work, with pilot programs and bank trials expected to inform any legislative or regulatory changes.