Japan plans blockchain-based instant settlement for stocks and bonds

Japan is moving toward a major overhaul of its securities settlement system. According to the Nikkei newspaper, the country is preparing to build a payment infrastructure that would use blockchain technology to settle transactions in stocks and Japanese government bonds instantly.

The Financial Services Agency, the Ministry of Finance, the Bank of Japan, and private financial institutions are expected to launch a joint study group this summer. The group's initial goal is to draft a development plan, possibly by the beginning of 2027. That plan would outline the design of the blockchain network, the division of responsibilities among the participating agencies and institutions, and a roadmap for implementation.

If the proposals receive formal approval, operations could begin within a few years, with the system potentially going live in the early 2030s. The initiative may also be extended to cover international remittances, according to the report.

Currently, cash settlement for stock trades in Japan takes place two days after execution, while Japanese government bond transactions are settled the following day. A real-time settlement system would eliminate this delay, allowing investors to reinvest proceeds from asset sales almost immediately after a trade is executed.