Japan's dominant security-token platform, Progmat, completed the migration of ¥452 billion ($3.3 billion) in tokenized real estate and corporate bonds from R3's Corda 5 to a dedicated Avalanche Layer 1 blockchain in July 2026. The move — designated "Project Keystone" — covers 53.4% of Japan's sec...
"The completion of this Avalanche integration represents a landmark moment where the Japanese security token market connects directly with the global real-world asset ecosystem." — Tatsuya Saito, CEO, Progmat Inc.
Japan's dominant security-token platform, Progmat, completed the migration of ¥452 billion ($3.3 billion) in tokenized real estate and corporate bonds from R3's Corda 5 to a dedicated Avalanche Layer 1 blockchain in July 2026. The move — designated "Project Keystone" — covers 53.4% of Japan's security-token deals by count and 64.6% by issuance value, making it the largest single transfer of regulated digital securities from a permissioned ledger to a public-chain environment on record.
Separately, Progmat's Digital Asset Co-Creation Consortium has assembled a 40-institution working group — including BlackRock Japan, MUFG, Mizuho, SMBC, Nomura, and Daiwa Securities — to study tokenizing Japanese Government Bonds (JGBs) and enabling on-chain repo transactions settled via stablecoins. The target: a $1.6 trillion repo market operating 24/7 with T+0 atomic settlement.
Progmat, originally spun out of Mitsubishi UFJ Trust and Banking (MUFG) in October 2023, operates Japan's largest security-token issuance platform. Prior to July 2026, all 45 of Japan's 89 public security-token projects running on Progmat used R3's Corda 5, a permissioned distributed ledger with no external connectivity.
The migration transferred all active projects — representing ¥452 billion in underlying assets and issued securities — to a purpose-built Avalanche L1 network supplied and operated by AvaCloud. The transition was completed without operational disruption, according to Progmat.
Key metrics:
| Metric | Value | |---|---| | Assets migrated | ¥452 billion (~$3.3 billion) | | Projects migrated | 45 of 89 public STO deals | | Market share (by deal count) | 53.4% | | Market share (by issuance value) | 64.6% | | Transaction finality | < 2 seconds | | Rights transfer improvement | 3–5x faster |
The platform's operating balance at the time the Ava Labs partnership was announced (February 26, 2026) stood at ¥439.6 billion. The increase to ¥452 billion by migration completion reflects new issuances during the transition period.
Project Keystone introduced a mediator architecture — an abstraction layer between business-logic applications and the underlying ledger. This design allows Progmat to swap or extend blockchain backends without disrupting client-facing processes.
The migration involved converting all smart contracts from Java-based Corda CorDapps to Solidity-based EVM contracts. The new Avalanche L1 operates with its own validator set, distinct from the primary Avalanche network, while maintaining native interoperability with the broader Avalanche ecosystem.
AvaCloud, the infrastructure provider, maintains SOC 1 and SOC 2 Type II compliance certifications and provides 24/7 outage response. Nick Mussallem, CEO of AvaCloud, stated that executing a full migration of over ¥452 billion in regulated securities without operational disruption establishes new standards for institutional-grade blockchain infrastructure.
Datachain, a blockchain interoperability startup and existing Progmat partner, provides cross-chain delivery-versus-payment (DvP) and payment-versus-payment (PvP) settlement capabilities for non-Avalanche blockchains.
The migration occurs against the backdrop of a rapidly expanding Japanese security-token market. According to BOOSTRY's Japan Security Token Market Report (FY2025), published by Nomura Holdings on April 2, 2026:
Asset class breakdown for FY2025:
| Asset Class | Issuance (¥B) | Share | |---|---|---| | Real estate trust beneficiary securities | 140.8 | 85.3% | | Corporate bond security tokens | 20.4 | 12.4% | | Private equity trust beneficiary securities | 2.4 | 1.5% | | Silent partnership equity (real estate) | 1.4 | 0.8% |
Seven individual security-token transactions exceeded ¥10 billion in FY2025. The START secondary market, operated by ODX, listed 8 tokens with a combined market capitalization of ¥33.6 billion as of March 31, 2026.
Real estate dominates. This is consistent with the asset class's suitability for fractionalization and the existing Japanese regulatory framework that accommodates trust beneficiary structures.
In May 2026, Progmat launched the "Tokenized Government Bonds and On-Chain Repo Working Group" within its Digital Asset Co-Creation Consortium, which counts over 330 member organizations.
The working group targets Japan's ¥250–270 trillion ($1.6 trillion) JGB repo market — approximately 10% of the estimated $16 trillion global government bond-backed repo market. Current JGB repo trades settle at T+1. The proposed on-chain system would deliver:
The working group plans to publish findings in October 2026 and aims for a proof-of-concept commercialization project before year-end.
A separate parallel initiative involving the Japan Securities Clearing Corporation, Nomura Holdings, and Mizuho Financial Group is running proof-of-concept trials on the Canton Network.
The most consequential unresolved design decision is the payment mechanism for on-chain repo settlement. Three options are under consideration:
The choice carries structural implications. A yen stablecoin keeps the system domestic but requires new issuance infrastructure. USDC provides immediate global interoperability but adds currency risk. Deposit tokens satisfy existing regulatory frameworks but sacrifice the composability that makes on-chain settlement economically interesting.
This decision will likely determine whether the system functions as an efficiency upgrade to existing infrastructure or as a genuinely new market structure.
The working group's membership reads as a roster of Japan's financial establishment:
| Institution | Role | |---|---| | BlackRock Japan | Cash-leg / BUIDL provider | | Mitsubishi UFJ Bank (MUFG) | Founding backer, megabank | | Mizuho Bank | Megabank | | Sumitomo Mitsui Banking Corp. (SMBC) | Megabank | | Daiwa Securities | Securities firm | | SBI Securities | Securities firm | | Nomura Holdings | Securities firm | | State Street Trust Bank | Custody / trust services | | Tokio Marine Holdings | Insurance | | JPYC | Stablecoin issuer | | Metaplanet | Brokerage | | Datachain | Cross-chain interoperability | | AvaCloud | Infrastructure provider |
All three of Japan's megabank groups — MUFG, Mizuho, and SMBC — are participating. The presence of BlackRock Japan, the world's largest asset manager, signals that the initiative is being designed with cross-border asset flows in mind.
The Progmat migration is significant for three reasons that merit analysis rather than enthusiasm.
1. Permissioned-to-public precedent. Enterprise blockchain deployments have overwhelmingly used permissioned ledgers (Corda, Hyperledger Fabric, Quorum). Progmat's migration establishes a production-grade precedent for moving regulated assets to public-chain infrastructure — not as a pilot, but as a full platform migration of $3.3 billion in live securities. This challenges the assumption that regulated securities require closed-network infrastructure.
2. Concentration risk. Progmat controls 64.6% of Japan's security-token issuance value. Migrating this dominance to a single Avalanche L1 creates infrastructure concentration risk. If Progmat's Avalanche L1 experiences downtime or a security incident, the majority of Japan's tokenized securities market is affected.
3. The JGB repo endgame. The $1.6 trillion repo market target dwarfs the current security-token market by three orders of magnitude. If the working group delivers a functioning T+0 settlement system, the economic value captured on-chain would exceed the entire current global tokenized-asset market. However, significant legal, tax, operational, and regulatory questions remain unresolved, and the gap between a working group report and production-grade sovereign bond infrastructure is substantial.
Japan's security-token market is making a decisive infrastructure bet. The Progmat migration transfers the majority of the country's tokenized securities from a closed enterprise ledger to public-chain rails, with immediate performance gains and longer-term interoperability implications. The JGB repo working group, if it produces actionable results, would connect this infrastructure to one of the world's largest fixed-income markets.
The economic logic is straightforward: T+0 settlement on a 24/7 system reduces capital requirements, eliminates overnight counterparty risk, and enables continuous collateral optimization. Whether the legal and regulatory framework can accommodate this logic at sovereign-bond scale is the open question.
What is not in question is the direction. Japan's largest banks, its dominant security-token platform, and the world's largest asset manager are building toward on-chain settlement of government debt. The decisions made by this working group over the next six months — particularly on the stablecoin cash leg — will determine whether Japan's tokenized securities market remains a domestic efficiency upgrade or becomes a template for global sovereign-debt infrastructure.