Four companies within Mitsubishi UFJ Financial Group have launched a proof of concept to test Japanese government bond repo transactions on the Canton Network, with the project targeting automated processing and 24-hour on-chain settlement.
Summary
- Four MUFG companies will test Japanese government bond repo transactions on the Canton Network.
- The proof of concept will examine automated transaction processing and real time settlement available 24/7.
- Digital Asset Holdings and Progmat will participate in the trial alongside MUFG, Mitsubishi UFJ Morgan Stanley Securities, Mitsubishi UFJ Trust and Banking and MUFG Bank.
- The project is part of Japan’s FSA backed Payment Innovation Project for testing blockchain based payments and settlement.
According to a Thursday announcement from MUFG, Mitsubishi UFJ Morgan Stanley Securities, Mitsubishi UFJ Trust and Banking and MUFG Bank will work with Digital Asset Holdings and Progmat on the trial.
The companies plan to examine whether blockchain infrastructure can automate more of the repo transaction lifecycle while allowing transactions to settle in real time throughout the day. The participants will also assess whether the model can improve the use of funding and capital.
Repo transactions generally involve one party selling securities to another while agreeing to repurchase them later. In the planned trial, Japanese government bonds will form the securities side of a transaction process being tested through blockchain infrastructure.
MUFG tests JGB repo settlement on Canton Network
Using Canton Network, the participating companies will test a model that can process Japanese government bond repo transactions on-chain rather than relying entirely on existing market infrastructure.
Digital Asset developed Canton as an institutional blockchain network designed for financial applications, including tokenized assets, collateral management, repo transactions and settlement.
The technology has already been tested with Japanese government bonds. In April, crypto.news reported on a trial involving Japan Securities Clearing Corporation, Mizuho Financial Group, Nomura Holdings and Digital Asset that used Canton to examine JGBs as digital collateral.
Under that proof of concept, the participants began testing whether transfers of rights and updates to book-entry records could be carried out using blockchain while complying with Japan’s existing legal framework. The project also covered the potential use of JGB collateral across borders and outside conventional operating hours.
Japan Exchange Group said at the time that the trial concerned JGBs whose rights are transferred under the country’s Act on Book-Entry Transfer of Corporate Bonds and Shares. Testing was designed to determine, from legal and operational perspectives, whether transfers and book-entry updates involving several account-management institutions could be handled through blockchain technology.
MUFG’s latest project moves the focus directly to repo transactions, where government bonds can be used in short-term financing arrangements.
Alongside settlement speed, the companies will examine automation across the transaction lifecycle. The participants said real-time intraday settlement operating 24 hours a day could improve funding efficiency by reducing the time assets and cash remain tied up during processing.
Japan’s FSA is supporting blockchain settlement tests
The proof of concept forms part of the Payment Innovation Project, a regulatory program operated by Japan’s Financial Services Agency under its FinTech Proof-of-Concept Hub.
Japan’s FSA launched the Payment Innovation Project in November 2025 to provide dedicated support for experiments involving payment infrastructure. The regulator has said the program helps companies address questions involving legal interpretation, compliance and supervision while they test new financial technology.
In February, the FSA selected an advanced securities settlement project for support under PIP. Financial Services Minister Satsuki Katayama said at the time that the project would examine transfers of rights to Japanese government bonds, corporate bonds, investment trusts and stocks through blockchain records.
The project also covers linking securities transfers with payments made using stablecoins, according to the regulator. Japan’s FSA said its support includes helping participants address legal and regulatory questions during the demonstration stage.
PIP has also covered stablecoin projects involving Japan’s major banks. A joint yen stablecoin project involving MUFG Bank, Sumitomo Mitsui Banking Corporation and Mizuho Bank has targeted live transactions during fiscal 2026, which ends in March 2027.
The three banks have been working on common rules covering issuance, governance and systems, with the structure intended to support corporate payment use cases. An earlier FSA-backed proof of concept examined joint stablecoin issuance and cross-border payments involving Mitsubishi Corporation’s operations in Japan and overseas.
Mitsubishi UFJ Trust and Banking handled the proposed trust-based issuance structure in that pilot, while Progmat supplied blockchain infrastructure.
Japan’s FSA said in June that PIP projects already included joint stablecoin issuance by major banks, cross-border stablecoin payments, blockchain-based securities transfers settled with stablecoins and interbank settlement involving tokenized deposits.
Progmat is already working on tokenized JGB repo markets
MUFG’s involvement also connects the trial with Progmat’s existing work on tokenized government securities.
Progmat established a Tokenized JGB / On-chain Repo Working Group under the Digital Asset Co-Creation Consortium in May. Participants have been studying how rights linked to Japanese government bonds could be tokenized and used as collateral in repo transactions, with stablecoins considered for the cash side.
The group includes MUFG Bank, Mizuho Bank, Sumitomo Mitsui Banking Corporation, State Street Trust and Banking, SBI Securities and Japan Exchange Group’s Market Innovation & Research division, among other institutions.
Zenith, an infrastructure provider connected to Canton Network, joined the group in June. The group has been examining T+0 settlement, 24-hour availability and cross-border access for a JGB repo market estimated at roughly 250 trillion yen to 270 trillion yen.
A report on the working group’s findings is expected in October 2026, while tokenized JGB issuance pilots have been targeted for later in the year.
Canton has also been used outside Japan for tokenized government securities. Earlier this year, S&P Dow Jones Indices and Kaiko moved a Treasury index onto Canton, with the iBoxx U.S. Treasuries index represented through smart-contract infrastructure alongside other tokenized Treasury activity on the network.
Digital Asset has continued to attract institutional funding while expanding Canton. In June, the company raised $355 million in a funding round led by Andreessen Horowitz, with the company focused on tokenized issuance, settlement, and collateral infrastructure.
MUFG has built its blockchain plans around Progmat
MUFG’s work with Progmat dates back several years. In June 2023, the Japanese financial group was discussing stablecoin issuance with companies through its Progmat platform, which was designed to support digital assets under Japan’s regulated stablecoin framework.
At the time, MUFG’s Progmat plans included enabling banks and other eligible institutions to issue stablecoins after Japan introduced rules limiting issuance to licensed banks, registered money transfer businesses and trust companies.
The stablecoin work followed MUFG’s decision in February 2022 to discontinue GO-Net Japan, a blockchain payment project that had been developed with Akamai Technologies. MUFG subsequently concentrated more of its digital asset work around Progmat and regulated token issuance.
By September 2024, MUFG Bank, Mizuho and SMBC were also preparing a cross-border stablecoin transfer trial under Project Pax. The project involved Progmat and Datachain and was designed to use Swift’s API as part of the transfer infrastructure.
Japan’s institutional stablecoin market has since moved closer to commercial use. MUFG, SMBC and Mizuho have targeted joint yen-denominated stablecoin transactions during fiscal 2026, with Progmat providing infrastructure for the project.
