MUFG tests real-time blockchain settlement for JGB repos in a ¥270 trillion market. The proof of concept runs through 2026, with a commercial target between fiscal 2027-2029.
Mitsubishi UFJ Financial Group has started a test for settling Japanese government bond repo transactions on a blockchain in real time. The project targets a market with ¥270 trillion, roughly $1.7 trillion, in outstanding balances. It aims to replace the current T+1 settlement cycle.
MUFG announced the proof of concept on Aug. 13. The bank said the focus is the settlement leg of JGB repos, short-term loans where one party sells a bond and agrees to repurchase it later, usually the next day. MUFG wants to use atomic delivery-versus-payment, meaning the bond transfer and cash payment happen in a single step.
The technology runs on the Canton Network from Digital Asset, combined with Progmat’s platform and protocols from Secured Finance AG. Three MUFG entities are taking part: MUFG Bank, the Mitsubishi UFJ Morgan Stanley Securities joint venture, and Mitsubishi UFJ Trust and Banking.
The actual JGBs are not being tokenized. They stay inside Japan’s traditional book-entry system. The blockchain layer handles synchronized settlement using tokenized deposits or stablecoins that Japan’s major banks have been developing in parallel.
The proof of concept is set to run through the end of 2026. MUFG targets a commercial rollout between fiscal years 2027 and 2029. A spokesperson said the system would free up capital tied to margin and collateral that counterparties must post to cover the risk of default during the T+1 window.
The initiative falls under Japan’s Financial Services Agency Payment Innovation Project, which started in February 2026. MUFG issued a Realty Token in March 2026 and has been working toward live stablecoin transactions with other Japanese megabanks, with plans for that to go live in June 2026.
The Canton Network was built for institutional use, allowing counterparties to transact without exposing their positions to the broader network. Real-time settlement removes the counterparty risk window that exists in the current system.
If the stablecoins under development gain traction through use cases like JGB repos, they could become infrastructure for a wider range of on-chain financial activity in Japan.
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