Today Nomura, Mizuho and the Japan Securities Clearing Corporation (JSCC) and Digital Asset Holdings unveiled plans for a tokenized collateral trial for Japanese government bonds (JGBs) on the Canton Network. Two fo the proof of concept (PoC) participants, Nomura and Mizuho, were previously announced as participants of an FSA sandbox, the Payment Innovation Project (PIP), that is exploring stablecoins for securities settlement.
In the United States, the DTCC has already disclosed plans to tokenize US Treasuries on the Canton Network. The US and Japanese initiatives are not entirely unrelated, as the JSCC has a DTCC relationship linked to tokenization not mentioned in today’s announcement. In 2024 when the DTCC unveiled its digital asset sandbox, DTCC Digital Launchpad, the JSCC was the first to adopt it for this same collateral use case. As part of the work, the DTCC published a paper on tokenized collateral in conjunction with JSCC parent JPX. It explored benefits such as the ability to transfer bonds instantly and 24/7, including to meet automated margin requirements and potentially for repo.
One key difference between today’s announcement and the DTCC Canton plans is the US tokenized Treasuries will be in production soon, whereas the Japanese PoC is at an earlier stage, given one of the goals is to explore whether any legislative changes are needed. The participants want to verify whether they can achieve the desired outcomes for JGBs under the Book-Entry Transfer Act and the Financial Instruments and Exchange Act.
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