MUFG Pilots Blockchain Settlement for Japanese Government Bond Repos

The initiative involves four MUFG subsidiaries collaborating with Digital Asset and Progmat to test the delivery-versus-payment process. Rather than issuing new tokenized bonds, the bank plans to update relevant account registers in parallel with blockchain-based records. This approach preserves the legal status of the assets while exploring the integration of tokenized deposits or stablecoins for the cash component of the transaction.

Beyond simple settlement, the project incorporates automated lifecycle management through a lending protocol developed by Secured Finance AG. This phase utilizes smart contracts to handle functions that traditionally require manual intervention. Selected by Japan’s Financial Services Agency under its Payment Innovation Project, the experiment aims to address regulatory and supervisory questions regarding digital settlement models. While the bank has not disclosed a timeline for commercial deployment, the test serves as a critical step toward aligning Japanese sovereign debt markets with the intraday repo capabilities already seen in U.S. and European financial systems.