The Japanese government is in the early stages of exploring legislative changes to enable local governments to raise money using digital bonds, according to the Nikkei newspaper. While it’s legal for corporates to issue digital securities, changes are needed for regional governments to have the same ability.
The legislative request is being driven by the Decentralization Reform Promotion strategy. This reference to decentralization refers to delegating powers to regions, rather than web3 decentralization.
Other regions have already demonstrated the viability of this approach. Switzerland is the most prolific issuer of local digital bonds, with issuances by Basel, Lugano (four), St Gallen and Zurich. In the United States, JP Morgan helped the City of Quincy issue a municipal bond last year, and AlphaLedger hosted three similar issuances in 2022.
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