Mitsubishi UFJ Financial Group said on Aug. 13 that four MUFG companies will work with Digital Asset and Progmat on a proof-of-concept for Japanese government bond repo settlement using Canton Network.
Summary
- MUFG will test onchain JGB repo settlement using Canton Network with Digital Asset and Progmat.
- The PoC will synchronize JGB book-entry records with blockchain while considering tokenized deposits or stablecoins.
- Secured Finance will test automating the full repo transaction lifecycle through its blockchain lending protocol.
- Japan’s FSA selected the project under its Payment Innovation Project pilot program in February 2026.
- MUFG says real-time intraday settlement could improve funding efficiency while expanding settlement windows for institutions.
The project will test whether JGB repo transactions can move closer to real-time settlement while remaining connected to Japan’s existing securities infrastructure, according to the bank’s release.
The plan is narrower than simply issuing new tokenized JGBs. MUFG said the bonds would retain their legal status as book-entry transfer bonds. The relevant account register would instead be updated in conjunction with blockchain records, while tokenized deposits or stablecoins are being considered for the cash side of settlement.
MUFG will test simultaneous JGB and digital-money settlement
One part of the PoC will test delivery-versus-payment settlement between JGBs and digital money. The goal is to synchronize the securities leg with the cash leg, reducing the risk that one side settles without the other. Digital Asset will provide the Canton-based tokenization framework, while Progmat will support analysis of current market practices and product design.
MUFG Bank and Mitsubishi UFJ Morgan Stanley Securities will act as market participants. MUFG Bank and Mitsubishi UFJ Trust and Banking will serve as account management institutions, while MUFG Bank will also act as the deposit-taking institution. MUFG did not name outside trading counterparties or provide a date for live commercial use.
A second test will automate the full repo lifecycle
The second part goes beyond settlement. Secured Finance AG will use its lending protocol to test automation across the repo transaction lifecycle, including functions handled through smart contracts. MUFG said it expects this design could improve operational efficiency while supporting real-time intraday repo transactions and longer settlement windows.
The project was selected in February under Japan’s Financial Services Agency Payment Innovation Project. The FSA has described the program as a way to address legal, supervisory and compliance questions before new payment and settlement models reach the public, according to its presentation. No regulatory approval for a commercial JGB repo service was announced with Thursday’s launch.
Japan is building several blockchain rails around sovereign debt
The MUFG test follows other Japanese work around government bonds. As previously reported, Japan Securities Clearing Corporation, Mizuho, Nomura and Digital Asset have tested JGBs as digital collateral on blockchain infrastructure. That project also examined whether the bonds could move digitally while remaining compliant with Japan’s existing securities framework.
MUFG is also developing digital cash infrastructure that could eventually interact with these markets. The bank, SMBC and Mizuho plan live transactions with a jointly issued yen stablecoin by March 2027 under a shared framework. MUFG’s new JGB PoC does not state that this planned stablecoin will be used in repo settlement.
U.S. repo pilots provide a model for the next phase
MUFG pointed to Europe and the U.S., where intraday government bond repo projects are further advanced. Canton said in January that an industry group completed cross-border intraday repos involving U.S. Treasuries, European government bonds, dollar and euro cash, and tokenized commercial bank deposits in a statement. MUFG said commercial intraday U.S. Treasury repo services are already operating.
For Japan, the next steps are still experimental. MUFG plans to engage regulators and a wider group of domestic and overseas financial institutions while also working with Morgan Stanley, its strategic alliance partner. The company did not provide a completion date, production launch target or transaction volume for the PoC.
What matters next is whether the test can synchronize legally recognized JGB ownership with blockchain settlement without creating breaks between existing book-entry records and onchain systems. Any move into production would also require decisions on the cash instrument, operating model and regulatory treatment. For now, the project remains a proof-of-concept rather than a live 24/7 JGB market.
