Japan Securities Clearing Corporation (JSCC), a part of Japan Exchange Group (JPX), announced on Monday that they will be conducting a proof of concept with Mizuho Financial Group, Nomura Holdings, and Digital Asset to test the use of Japanese government bonds as digital collateral on the Canton Network.
This project aims to explore the feasibility of transferring and managing Japanese Government Bonds (JGBs) onchain while ensuring compliance with the Book-Entry Transfer Act and the Financial Instruments and Exchange Act.
The trial will also evaluate the integration of existing systems with Canton’s blockchain infrastructure to facilitate more advanced, real-time collateral transactions on a 24/7 basis, including cross-border transactions.
The Financial Services Agency of Japan selected this initiative in February to receive support under its Payment Innovation Project, which is part of the FinTech PoC Hub.
This trial will contribute to the ongoing discussion on the efficiency of collateral movement across digital market infrastructure without compromising existing legal and supervisory frameworks in one of the world’s largest sovereign bond markets.
The participating companies noted the increasing adoption of digital assets in the United States and other markets, with Japan also showing momentum in this area. The outcome of this trial is expected to provide insights into the potential use of JGBs in digital collateral processes, although no commercial rollout has been specified.
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Canton expands government bond tests
In a previous Canton pilot in December 2025, tokenized US Treasuries were used as collateral in real-time transactions between major dealers and market participants, including Bank of America and Société Générale.
These tests demonstrated the feasibility of utilizing high-grade government securities onchain among multiple participants, and the new JGB trial aims to extend this approach to Japan’s government bond market.
Additionally, in February, the UK government selected HSBC’s Orion platform to host issuance for its Digital Gilt Instrument pilot within the Bank of England’s Digital Securities Sandbox as part of its exploration of distributed ledger technology for sovereign debt.
Cointelegraph reached out to JSCC and Digital Asset for comments, but had not received a response at the time of publication.
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