Japan’s ruling Liberal Democratic Party (LDP) has unveiled a new national strategy focused on stablecoins, tokenized banking and AI-powered digital payments. The plan, called the “Next Generation AI/On-Chain Financial Concept,” outlines a five-year roadmap to combine artificial intelligence and blockchain technology across Japan’s financial system.
The proposal aims to reduce dependence on foreign payment networks and fast-growing US dollar stablecoins such as USDT and USDC.
Japan aims to build a financial system that utilizes AI
The proposal focuses on “proxy commerce,” where AI systems make economic decisions on their own and complete payments automatically. The plan is for AI agents to eventually be able to manage supply chains, corporate procurement, inventory systems, and even household purchases without human intervention.
The Liberal Democratic Party believes that blockchain technology is necessary. Because blockchain technology makes automated payments programmable, secure, and verifiable in real-time.
The proposal also promotes tokenized bank deposits, yen-backed stablecoins, and a wholesale digital currency system connected to the Bank of Japan.
Core policy pillars supporting Japan’s crypto AI strategy
One of the biggest parts of Japan’s new proposal is its focus on four major fiscal pillars aimed at modernizing Japan’s economy through AI and blockchain infrastructure.
The Liberal Democratic Party believes that the future economy will be increasingly dependent on AI systems that automatically make financial decisions without human intervention.
Under this model, AI agents can manage inventory systems, supply chains, logistics, subscriptions, and even household purchases in real time. Blockchain technology acts as a payment and verification layer behind automated transactions, enabling secure machine-driven commerce 24/7.
- Tokenized deposits and Yen stablecoin
The proposal also encourages Japanese banks to use tokenized deposits and yen-backed stablecoins to improve payment speed and settlement efficiency. The plan would encourage the Bank of Japan to accelerate experimentation with wholesale digital currency systems, while commercial banks could issue tokenized deposits for large-scale commerce that operate around the clock.
Lawmakers believe a stronger yen-based digital payment system is needed to compete with dollar-backed stablecoins, which are rapidly growing globally.
- Foreign stablecoin framework
Japan is also developing rules for foreign-issued stablecoins to be operated domestically.
The Financial Services Agency recently completed a framework that allows approved foreign stablecoins to function as electronic payment tools regulated under Japanese law. The move could allow global stablecoin issuers to enter Japan while remaining subject to domestic regulatory oversight.
The proposal further highlights that tokenization is a major long-term growth area for the Japanese economy. Lawmakers want blockchain systems to support tokenized real-world assets such as government bonds, real estate, accounts receivable, and corporate financial products.
Eventually, governments themselves could issue tokenized government bonds and use programmable smart contracts to distribute specific public subsidies.
What’s next?
Although the proposal is not yet final law, the Liberal Democratic Party is expected to work with regulators and financial institutions to turn this framework into workable policy over the next few years. At the same time, regulators acknowledged that significant challenges remain.
The report warned of smart contract hacking, anti-money laundering concerns, privacy risks, and even future quantum computing threats that could undermine current blockchain security systems.
If successful, Japan could become one of the first major economies to fully integrate AI, stablecoins, tokenized deposits, and blockchain-based finance into the country’s financial infrastructure.
