Japan has emerged as the most advanced jurisdiction for regulated tokenized securities on public blockchain infrastructure. In the span of six months, the country's financial establishment has executed three parallel initiatives that collectively place trillions of dollars in regulated assets on-...
"The completion of this Avalanche integration represents a landmark moment where the Japanese security token market connects directly with the global real-world asset (RWA) ecosystem." — Tatsuya Saito, Founder and CEO, Progmat Inc.
Japan has emerged as the most advanced jurisdiction for regulated tokenized securities on public blockchain infrastructure. In the span of six months, the country's financial establishment has executed three parallel initiatives that collectively place trillions of dollars in regulated assets on-chain: Progmat's completed migration of ¥452 billion ($2.7 billion) in security tokens from Corda to Avalanche, a consortium-backed effort to tokenize Japanese Government Bonds (JGBs) for 24/7 settlement, and SBI Group's partnership with Ondo Finance to bring Japanese equities on-chain with yen stablecoin settlement.
Unlike isolated pilots elsewhere, these initiatives share a common feature: they are backed by Japan's three megabanks (MUFG, Mizuho, SMBC), operate within existing regulatory frameworks, and target liquid, institutional-grade assets rather than niche real estate fractions. Combined with a proposed 20% flat tax on digital asset gains (down from 55%) and reclassification of crypto assets as financial products under the Financial Instruments and Exchange Act (FIEA), Japan is building the first integrated national infrastructure for tokenized capital markets at scale.
Progmat, the digital asset platform spun out of Mitsubishi UFJ Trust and Banking in 2023, completed the migration of its entire security token platform from R3's Corda 5 to a dedicated Avalanche Layer 1 blockchain on July 13, 2026. The migration involved ¥452 billion ($2.7 billion) in active tokenized assets across multiple issuances, executed without operational disruption.
The numbers define Progmat's position in the domestic market. According to the company's disclosures, the platform accounts for 64.6% of Japan's cumulative security token issuance value and 53.8% of total projects nationwide. It is, by any measure, the dominant infrastructure provider for regulated digital securities in the country.
Technical details matter here. The migration moved Progmat's smart contracts from Java-based Corda code to Solidity-based EVM contracts, making the platform compatible with the Ethereum Virtual Machine ecosystem. Progmat reports that rights-transfer processing is now three to five times faster than the Corda-based system, with transaction finality in under two seconds. These figures come from Progmat's internal benchmarks and have not been independently verified.
Architecturally, Progmat redesigned the system to insert a mediator layer between its business applications and the underlying ledger. This abstraction means the platform is no longer dependent on a single blockchain. Future integrations with other EVM-compatible chains are technically possible without rebuilding issuance, ownership, or transfer processes.
The Progmat shareholder roster functions as a map of Japan's financial establishment: MUFG, Mizuho Trust & Banking, Sumitomo Mitsui Trust Bank, SMFG, SBI PTS Holdings, JPX Market Innovation & Research (the Tokyo Stock Exchange operator), and NTT DATA. The Digital Asset Co-Creation Consortium (DCC), which Progmat manages, counts 214 member companies.
The migration from Corda — a permissioned enterprise blockchain — to a public Avalanche Layer 1 represents a directional choice. It signals that Japan's largest security token operator has concluded that public chain infrastructure, with appropriate permissioning layers, provides better long-term optionality than closed enterprise networks.
Japanese Government Bonds represent the most significant target in Asia's institutional markets. Outstanding JGB issuance exceeds ¥1 quadrillion (approximately $6.4 trillion), and JGBs are the most widely used single collateral asset across the region's financial system. Circulation value exceeds $9 trillion.
Two separate consortia are now running parallel initiatives to bring JGBs on-chain.
Consortium 1: Progmat's DCC Working Group. Launched on May 7, 2026, this group is studying tokenized JGBs paired with stablecoin-based repo transactions to enable 24/7 trading and same-day (T+0) settlement. Participants include all three megabanks — MUFG, Mizuho Financial Group, and Sumitomo Mitsui Financial Group — alongside BlackRock Japan, Daiwa Securities Group, SBI Securities, and State Street Trust and Banking. The working group plans to publish a formal report covering legal, tax, and operational issues in October 2026, with a commercialization project targeted before year-end.
Consortium 2: JSCC-Mizuho-Nomura on Canton Network. Japan Securities Clearing Corporation (JSCC), Mizuho, and Nomura Holdings launched a proof-of-concept on April 20, 2026, testing digital collateral management for JGBs on the Canton Network, Digital Asset's privacy-preserving blockchain. The PoC runs through September 2026 and aims to verify blockchain-based JGB rights transfer within Japan's existing legal framework — specifically, the Act on Book-Entry Transfer of Corporate Bonds and Shares. Results will guide regulatory adjustments and commercialization decisions.
The coexistence of two consortia using different blockchain architectures (Avalanche via Progmat, Canton via JSCC/Nomura) underscores a notable absence of standardization. Both groups include Mizuho. Both target 24/7 settlement. Neither has declared interoperability with the other. This creates the possibility of fragmented infrastructure for the same asset class — a risk that Japan's Financial Services Agency (FSA) has not publicly addressed.
On July 16, 2026, SBI Holdings and Ondo Finance announced a partnership to tokenize Japanese equities and distribute them through SBI's institutional and retail channels. Settlement will occur in JPYSC, Japan's first trust bank-backed yen stablecoin, issued by SBI Shinsei Trust Bank with initial capital of ¥10 billion. JPYSC launched on June 24 on Ethereum.
The partnership has two components: tokenization and distribution of Japanese stocks through Ondo's infrastructure, and cross-distribution of Ondo's existing products (focused on U.S. equities and fixed income) to SBI's customer base.
This sits alongside a broader SBI initiative. The Osaka Digital Exchange (ODX), in which SBI holds a majority stake, operates START — a secondary market for security tokens that listed 8 tokens with ¥33.6 billion in combined market capitalization as of March 2026. SBI's vision, articulated across multiple announcements, involves enabling 24/7 trading of tokenized public company shares with minimum purchases as low as ¥1.
The ONDO token rose approximately 15–17% within 24 hours of the announcement, according to multiple market data sources.
Japan's regulatory framework provides the foundation enabling these initiatives to operate at institutional scale. Three regulatory developments in 2026 are directly relevant.
FIEA Reclassification. In April 2026, Japan's Cabinet approved a bill to reclassify crypto assets as "financial products" under the Financial Instruments and Exchange Act (FIEA). If passed by the Diet, this would subject digital assets to the same conduct, disclosure, and market oversight rules applied to traditional securities. Implementation is targeted for fiscal year 2027. The bill also introduces insider trading rules for digital assets.
Tax Reform. The proposed framework would reduce the tax rate on digital asset capital gains from a maximum of 55% (under the current "miscellaneous income" classification) to a flat 20%, aligning with the treatment of stocks and other capital gains. This change, if enacted, removes a structural disincentive that has constrained institutional participation.
Foreign Stablecoin Framework. Effective June 1, 2026, the FSA reclassified foreign-issued trust-type stablecoins from "Securities" to "Electronic Payment Instruments" under the Payment Services Act (PSA). This creates a legal pathway for foreign stablecoins — such as USDC — to operate within Japan's payment ecosystem alongside domestically issued alternatives like JPYSC.
The regulatory direction is consistent: classify digital assets within existing financial law, apply standard investor protections, and reduce barriers to institutional use. Japan's approach contrasts with the U.S., where stablecoin legislation (the GENIUS Act) has missed key deadlines and multiple agencies remain uncoordinated, and with the EU, where MiCA's licensing requirements have forced an estimated 75% of firms to exit the market.
According to BOOSTRY's FY2025 market report published by Nomura Holdings, total issuance in Japan's public security token market is projected to reach ¥200 billion in FY2026, with cumulative issuance reaching ¥530 billion. Progmat separately projects the market balance will surpass ¥1.5 trillion by end of 2026.
The global security token market reached approximately $7.93 billion in 2026, according to Business Research Insights, with projections to $37.93 billion by 2035 at a 19% compound annual growth rate. Tokenized stocks globally hit $12 billion in Q1 2026.
Japan's share is disproportionate to its GDP weight in global crypto markets. Progmat alone — one platform in one country — manages $2.7 billion in tokenized securities. The pipeline, including JGB tokenization and equities, targets assets measured in trillions rather than billions.
The critical variable is liquidity. Secondary market trading remains thin. ODX's START platform holds ¥33.6 billion across 8 tokens — not nothing, but not a liquid market by institutional standards. Whether tokenization translates into deeper, more continuous markets or merely replicates existing illiquidity in a new format remains an open question.
Japan's tokenized securities infrastructure is no longer a pilot. Progmat processes $2.7 billion in regulated assets on public chain rails. Three megabanks, BlackRock, and the Tokyo Stock Exchange operator are consortium members. The JGB tokenization effort targets the single largest government bond market outside the United States. Regulatory alignment — tax reform, asset reclassification, stablecoin frameworks — provides a coherent legal foundation that other jurisdictions lack.
The economic value question centers on whether this infrastructure generates efficiency gains that justify the transition costs. Progmat claims 3–5x faster settlement; that figure needs independent verification. 24/7 JGB repo markets could reduce overnight funding costs for banks; the magnitude of those savings depends on adoption rates. Tokenized equities with ¥1 minimum purchases could expand retail access; the impact depends on whether fractional ownership generates meaningful new demand or merely fragments existing order flow.
Japan has built more tokenized securities infrastructure on public blockchain rails than any other country. The remaining question is not technical capability — it is whether the economic value delivered to end users justifies the institutional commitment already made.