Japan's ruling Liberal Democratic Party has approved a comprehensive AI-blockchain finance proposal that positions the country as a regional leader in digital financial infrastructure. According to reports from the LDP's Policy Research Council and Digital Society Promotion Headquarters, the proposal titled 'Next-generation AI & Onchain Finance Concept' was prepared by an LDP project team under Seiji Kihara. As reported by crypto.news, Kihara confirmed the proposal had passed the party process and reached a final decision, with the document issued on May 19. The initiative, announced by the LDP's 'Next-Generation AI and On-Chain Finance Initiative Group', designates finance as a key growth sector and outlines measures to automate and enable continuous operations in decision-making, financing, and asset management. The proposal represents one of the most comprehensive government-level blueprints for AI-blockchain financial integration from a major economy to date.
The LDP plan references Japan's Payment Innovation Project, where three megabanks are studying joint stablecoin issuance with real use targeted by March 2027. As reported by crypto.news, the proposal supports tokenizing Bank of Japan current account deposits, including possible wholesale CBDC use, asking the central bank to publish its review path for implementation by year-end. Related reports show that MUFG, SMBC, and Mizuho are working on yen-backed stablecoin settlement networks, while Japan's FSA has been setting stricter reserve rules for stablecoin issuers. The initiative aims to position Japan at the forefront of financial innovation and digital transformation through these major bank collaborations.
The proposal introduces autonomous AI agents that would function as financial operators, executing trades, managing liquidity, rebalancing portfolios, and optimizing payments without direct human intervention. As reported by crypto.news, the AI layer is positioned as an 'emerging economic actor' capable of holding and deploying financial value through tokenized systems. The document frames AI as an emerging 'economic actor' capable of holding and deploying financial value through tokenized systems. Blockchain is positioned as the trust and settlement layer, with AI serving as the decision-making and execution layer, together enabling machine-to-machine transactions and real-time financial optimization. The proposal identifies six core pillars for overhauling Japan's financial infrastructure, with central to the plan being the tokenization of real-world assets (RWA), including bank deposits, securities, and real estate, settled directly on blockchain networks.
The LDP plan introduces a 'Global SC Corridor Concept' to advance cross-border settlements using yen-denominated stablecoins. According to the LDP document, the proposal introduces an 'AI and Onchain Finance Asia Policy Dialogue Framework' to align regional financial standards, bringing public and private groups together to discuss RWA definitions, audits, KYC, AML, and cross-border rules. The initiative notes that 40% to 50% of Japan's trade settlement with Asian countries is already yen-denominated, providing Japan with a base for wider regional payment cooperation. As reported by crypto.news, Bank of Japan Governor Kazuo Ueda has backed blockchain settlement research, including tokenized central bank money and sandbox work linked to current account deposits.
Implementing the proposal would require significant legal restructuring across Japan's financial system. The LDP document calls for updates to trust law, payment services regulation, and securities law, alongside formal coordination between the Financial Services Agency (FSA), the Bank of Japan, and private financial institutions. Japan's ruling party frames this as a policy-led transformation, comparing the scale of change to the historic shift from analog to internet-based finance. The proposal would enable continuous 24/7 markets with no market close through yen-denominated stablecoins and tokenized bank deposits, replacing legacy interbank rails for both domestic and cross-border payments. Digital securities would be integrated into a unified, programmable ledger-based system designed to reduce transaction costs and settlement delays.
