Japan Advances Tokenized Deposits and Stablecoin Framework Under New LDP Proposal

Highlights:

• Japan’s LDP approved a new proposal that focuses on tokenized deposits and yen stablecoins.
• Japan plans to expand blockchain settlement systems through AI-driven financial infrastructure.
• The AI blockchain finance proposal also supports cross-border yen stablecoin payments across Asian markets.

Japan’s ruling Liberal Democratic Party approved a new AI and blockchain finance proposal that aims to support tokenized deposits, yen stablecoins, and twenty-four-hour programmable settlement systems across Japan’s financial sector.

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The LDP Policy Research Council and Digital Society Promotion Headquarters released the proposal after internal approval. Lawmaker Seiji Kihara led the project team that prepared the document. Kihara later confirmed on X that the proposal had completed the party review process.

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

The proposal says Japan will use blockchain infrastructure to support continuous payments, lending, settlement, and contract execution services. The document says artificial intelligence could automate payments, logistics, lending, and asset management across digital markets.

The proposal also says AI agents could purchase products, process payments, and complete transactions for users without manual input. Therefore, the LDP said Japan needs an automated settlement infrastructure because AI-driven commerce could operate continuously across online markets.

The proposal says blockchain networks can support AI-driven commerce because smart contracts allow programmable and verifiable transactions. The document also says blockchain systems can reduce transaction disputes because tamper-resistant records store permanent payment data. In addition, the proposal identifies finance as Japan’s “18th growth investment sector” to support future investment and economic expansion.

The proposal asks ministries, regulators, banks, and private companies to coordinate future blockchain finance development. The document also asks Japan’s Financial Services Agency to create a five-year roadmap for AI and blockchain finance investment.

The proposal says Japan must reduce dependence on overseas payment infrastructure before foreign systems dominate digital finance markets. Seiji Kihara also said the LDP will continue refining the proposal before government agencies begin implementation work.

Tokenized Deposits and Yen Stablecoins Become Core of Japan’s Finance Strategy

The proposal identifies tokenized deposits and yen stablecoins as core tools for Japan’s future digital payment system. The document says tokenized deposits could connect payments, logistics, and trade through programmable smart contracts. Therefore, the proposal asks deposit-taking financial institutions to develop tokenized deposit products during the current fiscal year. The proposal also asks regulators to resolve legal and operational issues surrounding tokenized deposits before year-end.

The proposal also supports tokenizing the Bank of Japan’s current account deposits for settlement activity. The document asks the central bank to publish an implementation review path before the end of the year. The proposal also supports possible wholesale CBDC use for institutional settlement systems inside Japan’s banking sector.

The proposal also calls for clearer legal treatment of stablecoins across Japan’s financial system. The document asks ministries to determine whether stablecoins can support salary payments, tax payments, and company capital contributions.

The document also refers to Japan’s Payment Innovation Project involving MUFG, SMBC, and Mizuho. MUFG, SMBC, and Mizuho are developing a joint yen stablecoin framework for domestic and overseas payment settlement. The proposal says the project should target actual operations by next March.

The recent policy actions from Japan’s regulators and banks match the direction outlined in the LDP proposal. Japan’s Financial Services Agency has already tightened reserve requirements for stablecoin issuers. Meanwhile, Bank of Japan Governor Kazuo Ueda has supported blockchain settlement research involving tokenized central bank money and sandbox testing linked to current account deposits.

Bank of Japan is expanding its blockchain settlement sandbox.

In remarks by Governor Kazuo Ueda, the BOJ will test settlement using central bank reserves held as current account deposits, and study how a blockchain system can connect to existing rails for interbank and… pic.twitter.com/jHwP9zfktV

— PBG (@PBGtoken) March 3, 2026

Asia Onchain Finance Cooperation and Quantum Risk Enter LDP Proposal

The proposal also calls for stronger blockchain finance cooperation across Asian markets. The document recommends creating an “AI and Onchain Finance Asia Policy Dialogue Framework” between governments and private companies. The proposed framework would allow Asian governments and companies to coordinate audit rules, KYC standards, AML requirements, and real-world asset definitions.

The proposal also warns about risks connected to future quantum computing development. The document says advanced quantum systems could weaken existing blockchain cryptography standards. The proposal asks Japan’s Digital Agency to monitor quantum computing risks and prepare blockchain security response measures.

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