Japan to Test Blockchain Settlements in Regulatory Sandbox
The Bank of Japan (BOJ) is stepping up efforts to create an experimental regulatory and technological environment for testing settlements using central bank funds within blockchain systems.
Kazuo Ueda, Governor of the BOJ, announced at the FIN/SUM 2026 conference the regulator’s plans to expand activities within a regulatory sandbox aimed at testing financial blockchain solutions. The experiments will focus on developing mechanisms for connecting new platforms to the existing infrastructure, as well as testing scenarios for interbank blockchain-based securities settlements.
According to the BOJ Governor, when designing such solutions it’s essential to consider not only the potential benefits, like faster transactions and lower costs, but also the associated risks. In particular, flawed smart contract architecture could pose threats to the stability of financial markets and payment systems. Therefore, alongside technical trials, it’s necessary to develop institutional mechanisms and establish international best practices.
Another key area of work remains the retail central bank digital currency (CBDC) pilot project. As part of this initiative, the Bank of Japan is conducting technical experiments and engaging with the private sector through a dedicated forum, which is expected to be reformatted to allow broader discussion about the future of the payment system.
In parallel, the regulator is participating in the international Project Agorá initiative, where several central banks and major financial institutions are exploring the issuance of tokenized central bank deposits for cross-border settlements using smart contracts.
Ueda emphasized that in an environment where traditional and distributed payment systems coexist, the central bank must retain its role as an “anchor of trust,” ensuring par convertibility between different forms of money and reducing systemic risks. The regulatory and technological sandbox is viewed as a tool for the safe integration of financial innovations into the national financial system.
Blockchain-based financial innovation is already actively developing in Japan. Digital bank Minna no Ginko, a subsidiary of Fukuoka Financial Group (FFG), one of Japan’s largest regional banking groups, announced in 2025 the launch of a project aimed at testing the technical feasibility of issuing fiat-pegged stablecoins and tokenized assets, as well as assessing the practical use of blockchain wallets for individuals and corporate clients.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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