Progmat and Canton Developer Reach Basic Agreement on Tokenization of Japanese Government Bonds in Partnership with US Digital Asset, Aiming for 24/7 Settlement of RWAs

Key Points of This Article

• Progmat and Digital Asset reach a basic agreement on the tokenization of government bonds
• Aiming for 24/7 settlement while maintaining the nature of book-entry government bonds
• DCC's working group to transition to practical verification by November

Basic Agreement on Tokenization of Japanese Government Bonds

Progmat and US Digital Asset Holdings have signed a memorandum of understanding (MOU) for a strategic collaboration to utilize the Canton Network, a blockchain developed for institutional investors by Digital Asset, to enable on-chain transactions and settlements of real-world assets (RWAs), including Japanese government bonds (JGBs). Both companies will officially announce this on the 10th.

As the first phase of the collaboration, Progmat's digital asset issuance and management platform will be adapted to the Canton Network. They will work towards the realization of tokenizing government bonds as "tJGBs" while preserving the nature of book-entry government bonds, and will also advance collaboration with the book-entry account ledger. They will begin exploring services that make it easier for financial institutions to use the Canton Network's nodes and will gradually expand collaboration with financial institutions interested in verification.

Currently, the rights to government bonds are transferred based on the Book-Entry Transfer Act concerning corporate bonds and stocks, through records in the book-entry ledgers maintained by transfer institutions and account management institutions such as securities companies and banks. The tJGB will treat government bonds as tokens on the blockchain while maintaining this legal nature and the finality of settlement, enabling program-controlled 24/7 settlement.

Progmat holds the top market share in the domestic security token (ST) issuance platform. According to their data, out of 103 publicly announced ST projects, they handle over 290.6 billion yen out of a total transaction amount exceeding 470.3 billion yen.

Continuous Integration of Book-Entry Ledger and Chain

The core of the mechanism lies in the integration of the book-entry ledger held by account management institutions and on-chain data. Account management institutions will establish separate accounts for tokens, distinct from existing customer accounts, to handle the tokenization and un-tokenization of government bonds.

Progmat will continuously synchronize its operational database with the Canton Network, implementing common features with existing ST functions and off-chain data integration between the book-entry ledger and financial service providers.

Current cross-border settlements have separate infrastructures for funds and securities, and according to both companies' materials, it takes one to two days for delivery, and settlements cannot be made on holidays or at night. In the US, transactions using tokenized US government bonds and digital money as collateral, as well as intraday repo transactions that start and end on the same day, are becoming more concrete.

Both companies believe that the significance of solving issues through on-chain transactions for Japanese government bonds, which are widely used as collateral and in repo transactions, is substantial in cross-border transactions between domestic financial institutions and overseas residents.

Practical Verification on Canton Network by November

The "Digital Asset Co-Creation Consortium (DCC)" hosted by Progmat established the "Tokenized Government Bonds and On-Chain Repo Working Group (WG)" in May 2026. The WG, which includes over 68 organizations from both domestic and international, has had Digital Asset involved since its inception, sharing technical features of the Canton Network and precedents from the US.

The WG will transition to the second phase, the "Practical Verification Phase," by November. A sandbox environment will be prepared on the Canton Network to issue and manage tJGBs and tokenized deposits and stablecoins (both for verification tokens), gradually connecting with multiple repo and collateral platforms both domestically and internationally. This will provide a space for market participants to test hypotheses before practical implementation.

In August, Mitsubishi UFJ Financial Group (MUFG) and its subsidiaries, including Mitsubishi UFJ Bank, Mitsubishi UFJ Trust and Banking Corporation, and Mitsubishi UFJ Morgan Stanley Securities, announced their collaboration with Progmat and Digital Asset to verify simultaneous settlement (DvP) of government bonds and digital money, as well as the on-chainization of the entire lifecycle of repo transactions.

Going forward, both companies will continue to jointly explore the development of Progmat's connection to the Canton Network and node utilization services, verification with financial institutions, and commercialization as services for financial institutions, targeting banks, trust banks, securities companies, and short-term money companies. The results of the WG's discussions, verification results, and service roadmaps will be announced in a timely manner while communicating with relevant authorities.