Japan Securities Clearing Corporation (JSCC), part of Japan Exchange Group (JPX), said on Monday it will launch 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.
The project will explore whether Japanese government bonds (JGBs) can be transferred and managed on-chain while maintaining the bonds’ legal status under the Book-Entry Transfer Act and the Financial Instruments and Exchange Act.
The trial will also test whether integrating existing systems with Canton’s blockchain infrastructure can support more advanced, real-time collateral transactions on a 24/7 basis, including in 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 announcement said.
The trial places one of the world’s largest government bond markets in the hot seat of the debate over whether collateral can move more efficiently through digital market infrastructure without violating existing legal and supervisory frameworks.
The companies said the trial comes as the use of digital assets accelerates in the United States and other markets, with momentum also increasing in Japan, and that the outcome is expected to lead to discussions about how Japanese government bonds can be used in digital collateral processes, although no commercial rollout has been specified.
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Canton expands testing on government bonds
A previous pilot in Canton in December 2025 saw tokenized US Treasuries reused in real time as collateral between major dealers and market participants, including Bank of America and Société Générale.
These tests have highlighted the potential to reuse high-quality government bonds on-chain across multiple participants, and the new JGB trial extends that approach to the Japanese government bond market.
In addition, in February the UK government appointed HSBC’s Orion platform to host the issuance of its Digital Gilt Instrument pilot in the Bank of England’s Digital Securities Sandbox as it explores distributed ledger technology for sovereign debt.
Cointelegraph contacted JSCC and Digital Asset for comment but had not received a response by publication.
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