MUFG and three group companies have launched a collaboration with Digital Asset and Progmat on a proof of concept for Japanese government-bond, or JGB, repo transactions on Canton. The work will explore an on-chain settlement process for JGB collateral and digital money.
A repo is a short-term funding transaction in which securities are used as collateral. JGBs are widely used for that purpose by market participants in Japan and abroad. Under the proposed design, the transfer of JGB collateral and the associated payment would settle together — a model known as delivery versus payment.
Keeping familiar market roles at the centre
The proposed design keeps the legal nature of JGBs as book-entry transfer bonds. The transfer-registration ledger held by an account-management institution would be updated in conjunction with the blockchain. On the payment side, the group is considering tokenized deposits or stablecoins as digital money.
The work is designed to examine the full repo lifecycle as well as settlement. The companies say Secured Finance’s lending protocol would be used to automate the sequence of repo processes. They identify two expected benefits: greater operational efficiency through lifecycle automation, and improved funding and capital efficiency through real-time intraday repo transactions and an expanded settlement window.
What each partner brings
Digital Asset will provide the tokenization framework built on Canton and support token issuance and management. Progmat will analyze existing practices and support the application of blockchain technology to JGB book-entry transfers and their use in repo transactions. Secured Finance’s lending protocol would implement the repo lifecycle.
Within MUFG, Mitsubishi UFJ Morgan Stanley Securities and MUFG Bank will participate in the market workflow. MUFG Bank and Mitsubishi UFJ Trust and Banking will serve as account-management institutions, while MUFG Bank will also provide the deposit-taking role. Together, those roles allow the proof of concept to test an on-chain flow alongside the structure used in Japan’s existing JGB market.
A Japan-led institutional test for Canton
The project is part of a series of pilot projects selected in February 2026 under Japan’s Financial Services Agency Payment Innovation Project. MUFG says it will work with relevant authorities and financial-market participants in Japan and overseas as the proof of concept develops. MUFG’s original Japanese release sets out the same collaboration and the participating group companies.
For Canton, the initiative brings a widely used form of institutional collateral funding into a Japan-led proof of concept. It will explore simultaneous delivery-versus-payment settlement of JGBs and digital money, and the use of a lending protocol to automate the full repo lifecycle.
