Japan to test JGBs as digital collateral on Canton network
Japan Securities Clearing Corporation will run a proof of concept with Mizuho, Nomura and Digital Asset to test using Japanese government bonds as digital collateral on the Canton network.
Japan Securities Clearing Corporation, part of Japan Exchange Group, announced a proof of concept with Mizuho Financial Group, Nomura Holdings and Digital Asset to test Japanese government bonds as digital collateral on the Canton network.
The trial will examine whether Japanese Government Bonds can be transferred and managed on-chain while keeping their legal status under the Book-Entry Transfer Act and the Financial Instruments and Exchange Act. The project was announced Monday and follows selection in February by Japan’s Financial Services Agency for support through its Payment Innovation Project in the FinTech PoC Hub.
Participants will link JSCC infrastructure and market systems with Digital Asset’s Canton platform to run simulated or controlled transactions that mirror market activity. Tests will check whether existing settlement and custody systems can integrate with the ledger to support continuous, real-time collateral transactions and cross-border operations.
The work will probe technical and legal requirements for tokenizing JGBs and operating them as collateral on a distributed ledger. Areas under review include interoperability with current market systems, settlement finality, and the mechanics and operational controls for collateral reuse, including reuse among multiple participants.
No commercial rollout has been announced. Project partners said results will be used to inform policy and industry discussions about potential digital collateral practices for JGBs.
The Canton network has been used in earlier pilots. In December 2025, a Canton test saw tokenized U.S. Treasuries reused as collateral in real time between major dealers and other participants. In the U.K., authorities have also tested digital gilt issuance and custody in a central bank sandbox.
JSCC provides clearing and settlement for Japan’s securities markets under legal frameworks that govern book-entry transfers and financial instruments. The proof of concept will assess whether on-chain treatments can operate within those frameworks while enabling continuous collateral operations.
JSCC and Digital Asset did not immediately respond to requests for comment.
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