Japan to test government bonds as digital collateral on Canton

Update (April 28, 2026, at 12 pm UTC): This article has been updated to include a comment from a spokesperson at JSCC.

Japan Securities Clearing Corporation (JSCC), part of Japan Exchange Group (JPX), said Monday it will launch a proof of concept with Mizuho Financial Group, Nomura Holdings and Digital Asset to test the use of Japanese government bonds as digital collateral on the Canton Network.

The project will examine whether Japanese Government Bonds (JGBs) can be transferred and managed onchain while maintaining the legal status of the bonds under the Book-Entry Transfer Act and the Financial Instruments and Exchange Act.

The trial will also test whether integrating existing systems with Canton’s blockchain infrastructure can support more sophisticated, real-time collateral transactions on a 24/7 basis, including in cross-border use cases.

A spokesperson from JSCC told Cointelegraph the PoC will also be used to assess what governance and technical structure would be appropriate for a production environment, including how permissions, node operation and data access would ultimately be designed. They added that one proposed model under consideration involves keeping JGB rights within existing book-entry systems while mirroring equivalent rights onchain, with the aim of evaluating how such a structure might operate alongside current legal and supervisory frameworks.

Japan’s Financial Services Agency selected the initiative in February for support under its Payment Innovation Project, which is part of the FinTech PoC Hub, the announcement states.

The trial puts one of the world’s biggest sovereign bond markets into the live debate over whether collateral can move more efficiently across digital market infrastructure without breaking existing legal and supervisory frameworks.

PoC trial for digital collateral management using JGBs. Source: JPX

The companies said the trial comes as the use of digital assets accelerates in the United States and other markets, with momentum also building in Japan, and that the outcome is expected to inform discussions on how JGBs might be used in digital collateral processes, though no commercial rollout has been specified.

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Canton expands government bond tests

An earlier Canton pilot in December 2025 saw tokenized US Treasuries reused as collateral in real time between major dealers and market participants, including Bank of America and Société Générale.

Those tests highlighted the potential to reuse high-grade government securities onchain across multiple participants, and the new JGB trial extends that approach to Japan’s government bond market.

Separately, in February, the United Kingdom’s government appointed HSBC’s Orion platform to host issuance for its Digital Gilt Instrument pilot in the Bank of England’s Digital Securities Sandbox as it explores distributed ledger technology for sovereign debt.

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