Japan FSA pushes blockchain adoption across financial infrastructure

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 Financial Services Agency outlined the direction in its 2026 Strategic Priorities published on Sept. 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. The strategy is intended to encourage investment in targeted industries and support Japanese companies seeking to restructure or reorganize their businesses.

The FSA said it would now work on implementing measures included in that government strategy, including the use of blockchain alongside existing financial infrastructure.

Japan FSA plans on-chain finance forum

Blockchain and AI are changing how financial transactions can be processed, according to the FSA, which said combining new systems with existing infrastructure could improve areas such as fund transfers and securities settlement.

One part 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 groups are expected to consider technical, regulatory and supervisory questions surrounding the 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.

Tokenized assets enter Japan’s settlement plans

The FSA’s latest policy extends beyond payment systems to securities infrastructure as regulators prepare for increased tokenization of financial assets.

Officials plan to work with market participants on shortening and upgrading securities settlement while considering the development of asset tokenization. Japan currently settles domestic stock transactions on a T+2 basis, while Japanese government bond transactions generally settle on the following business day.

In August, crypto.news previously reported that Japanese authorities were preparing to study blockchain settlement for listed stocks and government bonds.

The reported initiative would involve the FSA, Ministry of Finance, Bank of Japan and financial institutions. An initial development plan could be prepared in early 2027, while any operational system would potentially arrive during the 2030s.

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.

Cross-border payments form another part of the policy

Cross-border payments will form another part of the FSA’s on-chain work, with the regulator planning policy discussions involving public and private sector participants across Asia.

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.

Payment infrastructure has already become a major area of blockchain development among Japanese financial institutions. 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, bringing digital asset supervision, innovation and digital payment planning under a standalone department.

AI agents enter Japan’s financial infrastructure work

AI will be considered alongside blockchain as the FSA examines how financial services and supervision may need to change.

The regulator said AI technology, including AI agents, could support services beyond operational efficiency by allowing financial institutions to offer products with more value for users. The agency plans to examine how market and financial institution supervision should respond as adoption increases.

Its policy calls for stronger support for the sound use of AI by financial institutions while accounting for risks associated with the technology.

The government’s July financial strategy placed the work within a plan to direct more capital toward growth investment and strengthen the financial infrastructure supporting the Japanese economy.

For on-chain finance, the FSA said public and private sector demonstrations and discussions would be used to identify technical, institutional and supervisory issues while maintaining user protection and financial system stability. The agency plans to use that process as it develops payment, securities settlement and other financial infrastructure that combines blockchain-based systems with existing financial networks.