The Bank of Japan will launch a technical sandbox to test blockchain-based settlement using central bank deposits. Governor Kazuo Ueda announced the project, which will explore interoperability with existing systems and examine use cases like interbank and securities settlement. The initiative is framed as a controlled experiment with external expert support, not a policy commitment.
The Bank of Japan will conduct technical experiments using blockchain technology to settle deposits held at the central bank by financial institutions. BOJ Governor Kazuo Ueda stated a sandbox project is underway to test settlement using central bank money in the form of current account deposits on a blockchain system.
The experiments will explore methods of connection with the existing system and examine use cases including domestic interbank settlement and securities settlement. The project centers on settlement using central bank current account deposits held by financial institutions at the BOJ.
The sandbox will study interoperability with current systems, including the Bank of Japan Financial Network System known as BOJ-NET. Ueda said insights from the project could also be used to improve BOJ-NET.
Ueda added that integrating artificial intelligence and blockchain could enable enhanced financial services built on transaction data. He also warned of design risks tied to smart contracts, saying “When the design of the smart contracts is inadequate, however, there is a risk that the stability of financial markets and payment systems will be threatened.”
The sandbox comes as Japan refines its digital asset regulatory framework. In 2025, the Financial Services Agency held public consultations on reclassifying certain tokens under the Financial Instruments and Exchange Act.
The government has also framed blockchain and tokenization as part of its broader “New Capitalism 2025” growth strategy. Japan is also expanding stablecoin integration at the private sector level.
On Oct. 27, 2025, JPYC launched Japan’s first yen-backed stablecoin under the country’s revised Payment Services Act. On March 2, Sony Bank and stablecoin issuer JPYC signed a memorandum of understanding to study real-time transfers enabling customers to purchase yen-backed stablecoins directly from bank accounts.
