Bank of Japan Tests Blockchain for Deposit Settlements
Japan’s central bank is testing blockchain for deposit settlements in a controlled sandbox environment.
The Bank of Japan has launched a pilot project to test deposit settlements using blockchain technology. According to Governor Kazuo Ueda, the initiative is a technical experiment conducted in a controlled sandbox environment.
The primary goal is to determine whether funds held by commercial banks in their central bank accounts can be settled through a blockchain-based system. The tests will cover domestic interbank settlements as well as securities clearing and settlement. A key focus of the project is evaluating how the new solution could integrate with the existing financial infrastructure.
Particular attention will be given to compatibility with the Bank of Japan Financial Network System, known as BOJ-NET. Ueda noted that insights gained from the experiment could help improve the current settlement network in the future.
The governor emphasized that the project is being carried out with support from external experts and does not signal the introduction of a new monetary policy. Instead, it represents a research phase exploring the potential application of distributed ledger technology within the financial system. However, Ueda also highlighted the risks associated with smart contracts, warning that design flaws could threaten the stability of financial markets and payment systems.
The central bank’s efforts align with broader regulatory developments in Japan’s digital asset sector. In 2025, the Financial Services Agency conducted consultations on bringing certain tokens under the scope of the Financial Instruments and Exchange Act. The Japanese government has also identified blockchain and tokenization as part of its “New Capitalism 2025” growth strategy.
At the same time, the stablecoin market in Japan continues to evolve. On October 27, 2025, JPYC launched the country’s first yen-backed stablecoin under the revised Payment Services Act. Meanwhile, Sony Bank signed a memorandum of understanding with JPYC to explore instant transfer solutions that would allow customers to purchase digital yen directly from their bank accounts.
