Japan's FSA Restarts Its On-Chain Finance Review — and the Real Battleground Is the Book-Entry Transfer System

A study group revived after two and a half years

A study group of the same name was set up in July 2021 and met 12 times through November 2023. This session restarts it as a "new first meeting." The mandate comes from the government's financial strategy for promoting growth investment, adopted on July 21, and the group handles institutional groundwork under the "On-Chain Finance Forum for the AI Era," which first met on September 30. It is chaired by Professor Emeritus Hideki Kanda of the University of Tokyo and has 15 members including the chair. The Japan Virtual and Crypto Assets Exchange Association, the Bank of Japan and the Ministry of Finance participate as observers.

Five issues on the agenda

The secretariat listed five areas — tokenization of stablecoins and deposits, security tokens, DEX/DeFi, the book-entry transfer system, and shorter securities settlement — and asked members which to prioritize. Its materials put cumulative global issuance of tokenized assets above USD 35 billion (about JPY 5.5 trillion) as of July 2026, and cited an estimate that the market could reach USD 18.9 trillion by 2033.

The heaviest issue for management is the book-entry transfer system. Rights in shares and bonds are determined by entries in transfer account registers; the Bank of Japan is the transfer institution for JGBs and the Japan Securities Depository Center (JASDEC) for everything else. Japan does not yet have a mechanism for trading JGBs, corporate bonds, investment trusts or shares held in these accounts on a blockchain. The secretariat flagged who would be responsible for and supervise a shared ledger, the role of account management institutions, and transfer procedures. In the US, DTCC received an SEC no-action letter in 2025 and is moving to launch a tokenization service. The materials noted that current Japanese law makes it difficult to set up a DTCC-style omnibus account for tokenization.

Proposals from Nomura and Securitize

Nomura laid out ten practical and legal issues. The main ones: tokenizing JGBs and listed shares by building on the existing book-entry law; enabling BOJ current-account balances and bank deposits to be used as on-chain settlement assets; and giving DeFi and wallet rules the same latitude as overseas. It also called for revisiting the JPY 1 million cap on holding and transferring overseas-issued stablecoins, legislating presumption of rights and good-faith acquisition for parties relying on on-chain records, and avoiding excessive rules for wallet providers that do not hold users' keys.

Securitize Japan reported that RWA tokens transferable outside their issuance platforms had reached a market value of about USD 39 billion (about JPY 6.1 trillion) at end-September, with a three-year compound annual growth rate of 195%. It recommended a public-chain-first framework and legal reform that includes a review of JASDEC, warning that a path lacking international compatibility would cost time and money and widen Japan's gap with overseas markets.

For DEXs, the focus is on whoever provides the interface

On DEXs, the secretariat cited the December 2025 report of the crypto-asset working group. For businesses that offer Japanese residents an interface connecting to DEXs, the plan is first to understand actual practices, with risk disclosure and anti-money-laundering duties including KYC in mind. It also introduced FATF's July approach of sorting DeFi into three types depending on whether a "controller" exists and can be identified. Regulating at the point of user contact rather than at the protocol itself is becoming the leading design.

Early 2027 is the milestone

The forum plans to publish an interim summary and a public-private roadmap in early 2027. Specific legislative issues are already on the table, such as amending the Investment Trust Act to drop paper beneficiary certificates (proposed by DCC in April). The coming year will decide how far industry input shapes the final design.

[Business Development Insights]

1. The core issue is connecting the book-entry system to DLT. If transfer institutions can see holdings directly on a shared ledger, the value of account management institutions shifts from record-keeping to client relationships, credit, tax and inquiry handling. Trust banks and securities firms need to decide early which layer they will earn in.
2. The period before the early-2027 roadmap is when the rules can still be influenced. Firms that bring proof-of-concept data and specific requests — the JPY 1 million cap, good-faith acquisition, omnibus accounts — gain both influence over the design and first-mover position.
3. If DEX regulation lands on interface providers, demand will emerge for compliance-ready front-end infrastructure with built-in KYC, risk disclosure and transaction monitoring. Financial institutions that want to bring DeFi liquidity to domestic clients will soon face a build-or-buy decision.

[Sources]

FSA, Study Group on Digital and Decentralized Finance, meeting notice (Oct 20, 2026) https://www.fsa.go.jp/singi/digital_2026/shiryo/20261020.html FSA secretariat materials https://www.fsa.go.jp/singi/digital_2026/shiryo/261020/jimukyoku.pdf Nomura Holdings materials https://www.fsa.go.jp/singi/digital_2026/shiryo/261020/hearing_1.pdf Securitize Japan materials https://www.fsa.go.jp/singi/digital_2026/shiryo/261020/hearing_2.pdf CoinPost https://coinpost.jp/?p=744022 New Economy (Gentosha) https://www.neweconomy.jp/posts/619150 JinaCoin https://jinacoin.ne.jp/fsa-defi-dex-token-20261020/ NADA NEWS https://www.nadanews.com/383689/