Japan Securities Clearing Corporation (JSCC), part of Japan Exchange Group (JPX), announced on Monday that it will launch a proof of concept to test the use of Japanese government bonds as digital collateral on the Canton Network in collaboration with Mizuho Financial Group, Nomura Holdings, and Digital Asset.
In this project, we will examine whether it is possible to transfer and manage Japanese government bonds (JGBs) on-chain while maintaining their legal status under the Book-Entry Transfer Act and the Financial Instruments and Exchange Act.
The trial will also test whether existing systems can be integrated with Canton’s blockchain infrastructure to support more advanced real-time collateral trading 24/7, including cross-border use cases.
Japan’s Financial Services Agency selected the initiative in February for support under its Payment Innovation Project, which is part of the FinTech PoC Hub, the statement said.
The case brings one of the world’s largest government bond markets into a lively debate over whether collateral can be moved more efficiently over digital market infrastructure without disrupting existing legal and supervisory frameworks.
The companies said the trial comes as the use of digital assets accelerates in the U.S. and other markets, and is gaining momentum in Japan, and the results are expected to inform discussions on how to use government bonds in digital collateralization processes, although commercial deployment was not specified.
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Canton expands national debt test
In an initial trial conducted in Canton in December 2025, tokenized U.S. Treasuries were reused as collateral in real time between major dealers and market participants, including Bank of America and Société Générale.
These tests highlight the potential for on-chain reuse of high-grade government bonds across multiple participants, and the new JGB trial extends that approach to the Japanese government bond market.
Separately in February, the UK government appointed HSBC’s Orion platform to host a pilot issuance of a digital gilt instrument in the Bank of England’s digital securities sandbox, which is exploring distributed ledger technology for sovereign debt.
Cointelegraph reached out to JSCC and Digital Asset for comment, but did not receive a response in time for publication.
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