Toward "On-Chain Financial Sovereignty" as National Strategy—The LDP's Vision of Distributed Ledgers and AI as Financial and Industrial Infrastructure

Positioning and Governance Structure

The proposal was compiled on May 19 by the "Next-Generation AI and On-Chain Finance Concept Project Team (PT)"—chaired by Seiji Kihara, former Deputy Chief Cabinet Secretary—within the LDP Policy Research Council's Digital Society Promotion Headquarters, and was then formally approved by the Policy Research Council. The PT was jointly established by the Digital Society Promotion Headquarters and the Finance Research Commission on March 24, 2026, structured to address both the payment-system/financial-institution dimension and the AI/blockchain technology dimension. Kihara is the same figure who launched a parliamentary league in 2021 under the banner "Make Blockchain a National Strategy"; that earlier agenda has now crystallized into a financial-infrastructure framework.

The Three Pillars—TD, SC, and RWA

The concept targets the "automation, interconnection, and 24/7/365 operation" of payments, lending, and asset management. First, tokenized deposits (TD): it calls for organizing the issues around tokenizing Bank of Japan current-account deposits (including a wholesale CBDC) and publishing them within the year. Second, stablecoins (SC): it would clarify, across ministries, their legal treatment for uses such as salary payments and tax remittance, and study a jointly issued SC from the three megabanks with a view to commencing live operation by March 2027. Third, advancing an "asset-management nation" through the on-chain tokenization of real-world assets (RWAs) such as accounts receivable and real estate—embedding an aim of industrial competitiveness that extends beyond finance.

Economic Security as the Driving Motive

Notable is the sense of crisis running through the proposal. In Japan, stablecoin issuance—centered on the US-dollar-denominated USDT and USDC—has recently expanded to roughly ¥45 trillion. The proposal explicitly warns that delay would create economic-security risks from dependence on foreign payment systems, as well as currency-substitution risks. Looking ahead to the arrival of "agentic commerce," in which AI agents autonomously conduct economic activity, it positions the build-out of the underlying on-chain financial infrastructure as an urgent priority.

Asia Cooperation and Remaining Challenges

On external strategy, it proposes creating an "AI and On-Chain Finance Asia Policy Dialogue Framework" (provisional name) and a "Global SC Corridor Concept" (provisional name) to expand cross-border settlement in yen-denominated stablecoins. The aim is to establish regulatory and supervisory equal footing across countries and extend a Japan-originated financial model across Asia. On implementation, it calls for the Financial Services Agency (FSA) to lead a five-year roadmap and to promote public-private investment. At the same time, it flags the risk of cryptographic compromise by quantum computers, urging the Digital Agency to conduct continuous monitoring and study alternatives. Separately, on the same day the FSA promulgated a Cabinet Office ordinance formally recognizing foreign-issued (trust-type) stablecoins as electronic payment instruments (effective June 1), so institutional groundwork is advancing in parallel.

[Business Development Insights]

1. Policy direction functions as a "demand map" for new ventures: Domains explicitly designated as national strategy (tokenized deposits, stablecoins, RWAs, cross-border settlement, etc.) are highly likely to see concentrated progress in regulatory development, public-private investment, and standardization. In planning new businesses, it is effective not merely to argue the superiority of one's own technology, but to align project milestones with the time horizon the policy roadmap describes, and to secure a "first-mover slot" around the moment institutions take shape.
2. In the "infrastructure" phase, neutrality and interoperability become differentiators: When a technology is adopted as the foundation for finance and industry, the selection criteria shift from single-provider performance competition to interoperability across systems, regulatory conformity, and governance neutrality. Operators that place reliability-as-infrastructure—rather than features prized in the speculative phase—at the center of their design are better positioned to win institutional and public-sector demand.
3. The economic-security context generates new domestic demand: As dependence on foreign systems surfaces as a policy issue, procurement demand requiring "domestic / in-region completeness" emerges. Constraints once treated as cost—domestic locality of physical sites and legal entities, conformity with data sovereignty—can instead convert into entry barriers and competitive advantage. When choosing which demand to pursue, it is crucial to identify these "domains where domestic locality is a mandatory condition."

[Sources]

• Next-Generation AI and On-Chain Finance Concept PT Proposal (PDF hosted on Rep. Seiji Kihara's site) https://kiharaseiji.com/wp/wp-content/uploads/2026/05/次世代AIオンチェーン金融構想PT提言.pdf
• CoinPost, "LDP Digital Society Promotion Headquarters proposes a next-generation finance concept leveraging AI and blockchain" https://coinpost.jp/?p=709616
• Liberal Democratic Party, "Showing a Japan-originated next-generation financial model to the world: new PT established on the twin tracks of payment systems/financial institutions and AI/blockchain" https://www.jimin.jp/news/information/212839.html
• Nikkei, "AI × finance: a public-private platform in Asia—the LDP's draft proposal" https://www.nikkei.com/article/DGXZQOUA124H30S6A510C2000000/
• Nikkei, "'Public-private review needed' to avert AI financial risks—LDP proposal" https://www.nikkei.com/article/DGXZQOUB1867R0Y6A510C2000000/
• CoinPost, "FSA formally recognizes foreign-issued stablecoins as electronic payment instruments; Cabinet Office ordinance amendment promulgated" https://coinpost.jp/?p=709645