Zenith Enters Japan’s Tokenized JGB Working Group as Repo Research Progresses

Japan’s financial industry is expanding research into tokenized government bonds as one of the country’s largest blockchain-based capital markets initiatives adds new infrastructure participants ahead of planned pilot testing later this year.

The Tokenized JGB and On-chain Repo Working Group, established by digital securities platform Progmat under the Digital Asset Co-Creation Consortium (DCC), has broadened its collaboration by bringing in blockchain execution layer developer Zenith. The company joins banks, securities firms and market infrastructure providers already participating in a joint study on how Japanese Government Bonds (JGBs) could be used in blockchain-based repurchase (repo) transactions.

The initiative is less about issuing a new digital asset than modernizing an existing wholesale funding market. Repo transactions allow financial institutions to obtain short-term liquidity by selling government bonds with an agreement to repurchase them later. Because these transactions underpin daily liquidity management across banks and brokerages, reducing settlement delays has become a priority for several financial markets globally.

Participants in the working group include MUFG Bank, Mizuho Bank, Sumitomo Mitsui Banking Corporation, SBI Securities, State Street Trust and Banking, BlackRock Japan and Japan Exchange Group’s Market Innovation & Research division.

Study focuses on settlement efficiency

The consortium is evaluating whether tokenized government bonds and stablecoin-based settlement can improve operational efficiency in Japan’s repo market, which is estimated to exceed ¥250 trillion ($1.6 trillion). The initiative also highlights the growing Japan stablecoin market, where regulated digital payment instruments are increasingly being explored for institutional transactions and capital market infrastructure.

Among the areas being examined are:

• Instant or same-day settlement of repo transactions
• Tokenized JGBs serving as digital collateral
• Stablecoins as settlement assets
• Interoperability between blockchain networks and existing financial infrastructure
• Regulatory and operational standards for institutional adoption

The working group began its technical study in May and plans to publish a report outlining its findings in October. Pilot transactions involving tokenized JGBs are expected to be considered after the study is completed.

Working Group Expands Technical Participation

Zenith has joined the working group as a technology participant. The company will contribute to protocol design, interoperability and blockchain infrastructure as the consortium studies tokenized Japanese government bonds and on-chain repo transactions.

Zenith develops execution infrastructure for the Canton Network, which is designed for regulated financial applications. Its role is focused on supporting the technical development of the project rather than issuing financial products. The addition reflects a broader trend in institutional blockchain projects, where banks increasingly work with technology companies to develop blockchain infrastructure for capital markets.

Tokenization Efforts Extend to Japan’s Sovereign Debt Market

Japan has been one of the earliest adopters of regulated digital securities in Asia, with tokenized real estate accounting for much of the country’s issuance over the past several years. The latest initiative marks a move into sovereign debt markets, a significantly larger asset class that plays a central role in financial market liquidity. Analysts believe these developments could further accelerate the growth of the Tokenized Yield Market, as investors increasingly seek blockchain-based access to income-generating assets backed by traditional financial instruments.

The project also mirrors similar efforts underway in other major financial centres. Banks and market operators in the United States, Europe and Singapore have been testing tokenized government securities, digital cash settlement and blockchain-based collateral management as institutions look for ways to shorten settlement cycles and improve capital efficiency.

Unlike many blockchain projects aimed at retail investors, tokenized repo infrastructure targets existing financial market participants and is intended to operate within established regulatory frameworks rather than replace them.

While commercial deployment remains subject to regulatory approval and successful testing, the consortium’s findings could influence how Japan approaches blockchain integration across government bond markets and post-trade infrastructure in the coming years.