Japan’s ruling Liberal Democratic Party has advanced an on-chain finance plan that promotes stablecoins, tokenized deposits and blockchain settlement as financial infrastructure intended to protect the yen, presenting those instruments together within a single policy proposal.
The proposal asks the Financial Services Agency to draw up a five-year roadmap that outlines how the measures should be phased and coordinated across regulators and industry.
The plan also proposes positioning finance as Japan’s 18th growth investment field to elevate the sector within the country’s broader economic agenda, as stated in the proposal.
Drafts were prepared by a digital policy working group within the LDP, chaired by Seiji Kihara, after meetings with banks, stablecoin issuers, tokenization firms, regulators and academics from March. The working group’s drafts formed the basis of a proposal that the Policy Research Council formally approved Tuesday. The proposal brings together recommendations on stablecoins, tokenized deposits and blockchain settlement as elements of financial infrastructure.
The plan proposes clarifying how stablecoins could be used for payroll, tax payments, corporate funding and cross-border transfers. The proposal asks the Financial Services Agency to draw up a five-year roadmap. The proposal also seeks to position finance as Japan’s 18th growth investment field.
The proposal indicates the country’s central bank needs to study tokenized current account deposits, including a wholesale central bank digital currency. It calls for officials to review bank-issued stablecoins and the cross-border use of yen-denominated stablecoins. The proposal also recommends pursuing shared Asian rules for tokenized assets, audits, know-your-customer (KYC) requirements, anti-money-laundering (AML) measures and counter-terrorist financing.
The text above summarizes the working group’s principal proposals and the institutional roles identified in the approved plan. It presents the key policy elements and assigned responsibilities without additional procedural detail.
Industry observers said the proposal would place Japan’s crypto policy inside familiar financial guardrails, instead of a looser market experiment. Joshua Chu, lawyer, lecturer, and co-chair of the Hong Kong Web3 Association, said “Japan isn’t freelancing here,” and added that the country’s push for on-chain finance would operate under regulated money movement and market structure “wrapped in code.” Chu also said Tokyo’s bet is that a conservative, fully KYC’d stack can become a 24/7 system “scalable enough” for both money-laundering and securities regulators.
Samar Sen, head of international markets at Talos, said “The momentum here cannot be ignored.” Wish Wu, CEO and co-founder of Pharos, said those countries are “moving more aggressively” on commercialization, leaving Japan’s edge dependent on how quickly it can move from policy alignment and pilots to real on-chain financial usage at scale. Both comments were made to Decrypt.
Japan’s three-bank stablecoin initiative shows the kind of bank-led effort that can move pilots into real infrastructure, industry observers said. Observers used that initiative as an example of how bank-led projects could progress toward production-grade systems rather than remain experimental. The commentary repeatedly emphasizes regulatory compliance and KYC as central design features in the proposed approach.
Japan is adopting a structured approach to on-chain finance that emphasizes regulatory alignment and the use of pilot programs to integrate stablecoins, tokenized deposits and blockchain settlement into its financial infrastructure while protecting yen sovereignty.
The approach centers on coordinating regulators and industry through roadmaps and compliance-focused design, aiming to move bank-led pilots toward operational systems under established financial guardrails.
