Japan explores on-chain finance for government benefits and bonds

The Financial Services Agency (FSA) has released minutes from its first on-chain finance forum, detailing plans to integrate blockchain technology into public financial systems. The Digital Agency is investigating the technical feasibility of using stablecoins and tokenized deposits for government benefits, such as childcare and food subsidies, to improve administrative efficiency and reliability through programmable constraints.

The Ministry of Finance is also preparing to launch an expert study group in October to discuss the on-chain implementation of government bonds. Additionally, the Bank of Japan is conducting technical verifications via its ‘DLT-linked sandbox’ to explore using central bank reserves for blockchain-based settlements.

Experts at the forum emphasized the need for a ‘best mix’ of on-chain and off-chain systems to balance 24-hour instant settlements with the ability to cancel or recover funds. A roadmap for public-private collaboration is expected to be finalized in early 2027.