- Japan’s LDP approved the “Next-generation AI & Onchain Finance Concept” on May 19, 2026.
- AI and blockchain were positioned as core technologies for future financial systems.
- Tokenized deposits and yen stablecoins were identified as key policy priorities.
- The proposal supports tokenizing Bank of Japan deposits and examining wholesale CBDC use.
- The plan also proposes an Asia on-chain finance dialogue framework for regional cooperation.
Japan LDP Advances AI and Blockchain Finance Strategy
Japan’s Liberal Democratic Party approved a proposal on May 19, 2026, outlining a next-generation financial system built around artificial intelligence and blockchain technology.
The proposal, titled “Next-generation AI & Onchain Finance Concept,” was prepared by an LDP project team led by Seiji Kihara. The document was issued by the party’s Policy Research Council and Digital Society Promotion Headquarters. The proposal describes AI and blockchain as technologies that could support a financial system where payments, contracts, lending, and delivery operations function continuously.
次世代AI・オンチェーン金融構想PTの提言が党プロセスを経て最終決定しましたので、ご報告します。… pic.twitter.com/Z9vx6N6rt9
— 木原 誠二 (@kihara_seiji) May 19, 2026
Seiji Kihara stated on X that the proposal had passed the party process and received a final decision.
Kihara said, “It is truly a ‘concept,’ and from here on, we will build it up piece by piece.”
The proposal identifies finance as a strategic growth sector while calling for regulatory roadmaps and risks management measures.
Tokenized Deposits and Yen Stablecoins Become Central Focus
The document states that Japan should promote tokenized deposits capable of using smart contracts to connect payments with trade and logistics systems. It calls on deposit-taking financial institutions to develop tokenized deposit products and resolve key issues related to implementation within the year.
The proposal also seeks clearer legal treatment for stablecoins. It says Japan should clarify whether stablecoins can be used for wages, tax payments, and company capital contributions through cross-ministry discussions expected within the fiscal year. The document further supports tokenizing Bank of Japan current account deposits and includes consideration of wholesale central bank digital currency use.
It requests that the Bank of Japan publish its implementation review path by the end of the year. The proposal also references Japan’s Payment Innovation Project, where MUFG, SMBC, and Mizuho are studying joint stablecoin issuance. According to the document, the initiative is targeting practical use by next March, including overseas cash management applications for large corporations.
Proposal Includes Asia On-Chain Finance Framework
The LDP proposal calls for the creation of an “AI and Onchain Finance Asia Policy Dialogue Framework.” The framework would bring together public and private sector participants to discuss real-world asset definitions, audits, KYC, AML, and cross-border regulatory standards. The document also states that Japan should work toward building an Asian on-chain finance platform. It notes that between 40% and 50% of Japan’s trade settlements with Asian countries are already denominated in yen, which the proposal identifies as a foundation for broader regional payment cooperation.
Japan’s May 19 approval follows months of accelerating policy and banking activity around blockchain-based finance and tokenized infrastructure. In March 2026, the Liberal Democratic Party launched the “Next-Generation AI and On-Chain Finance Vision Project Team” under its Digital Society Promotion Headquarters, focusing on AI-driven financial infrastructure, tokenized assets, and regulatory modernization.
Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corporation, and Mizuho Financial Group are jointly studying yen stablecoin issuance and tokenized deposit infrastructure, with practical corporate use cases targeted by March 2027. Japan’s stablecoin framework, established through amendments to the Payment Services Act in 2023, has enabled banks to move forward with regulated blockchain payment initiatives supported by the Financial Services Agency.
BOJ Expands Blockchain Settlement Experiments
Bank of Japan Deputy Governor Ryozo Himino recently emphasized the importance of stablecoins, tokenized bank deposits, and blockchain-based settlement systems. He also confirmed that the BOJ has launched a sandbox project exploring tokenized central bank reserve settlements. The LDP proposal calls for the BOJ to publish a clearer implementation review path for tokenized settlement infrastructure and wholesale CBDC-related initiatives by the end of 2026. Japan is moving toward deeper integration of digital assets into mainstream finance while maintaining strict regulatory standards for consumer protection, reserve backing, and anti-money laundering compliance. Analysts view the LDP proposal as a significant policy signal that could accelerate tokenized asset adoption, stablecoin development, and regional cooperation in on-chain payments across Asia.
At the end of February, JPYC Inc. raised $11.9 million (1.78 billion yen) in a Series B funding round led by Asteria Corporation. Japan’s latest proposal signals a broader shift toward integrating blockchain infrastructure, stablecoins, and tokenized finance into mainstream financial systems. Analysts believe the initiative could accelerate institutional adoption and strengthen Japan’s position as a leading regulated on-chain finance hub in Asia.
FAQs
1. What is Japan’s “Next-generation AI & Onchain Finance Concept”?
The proposal approved by Japan’s Liberal Democratic Party outlines a financial system that uses AI and blockchain technology for payments, contracts, lending, and settlements.
2. What are tokenized deposits in the LDP proposal?
Tokenized deposits are digital bank deposits designed to operate on blockchain networks and support programmable transactions through smart contracts.
3. How does the proposal address yen stablecoins?
The proposal calls for clearer legal rules on whether yen stablecoins can be used for wages, tax payments, and company capital contributions.
4. What is the Asia on-chain finance framework mentioned in the proposal?
The framework is intended to support regional discussions on blockchain finance standards, including KYC, AML, audits, and cross-border payment rules.
Source: Japan LDP proposal
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