Japan’s Financial Regulator Proposes Framework for Tokenized Securities Market
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Japan’s Financial Services Agency (FSA) has unveiled a new proposal aimed at establishing a comprehensive regulatory framework for tokenized securities, marking a major step toward modernizing the country’s capital markets through blockchain technology. The announcement, made on September 19, 2025, highlights Japan’s ongoing efforts to integrate digital asset innovation with traditional finance in a secure and transparent way.
The proposed framework seeks to define clear rules for the issuance, trading, and custody of tokenized securities—digital representations of stocks, bonds, and other assets issued and managed on blockchain networks. Under the plan, licensed financial institutions and approved technology providers will be allowed to offer tokenized investment products to both retail and institutional investors.
“The tokenization of securities has the potential to transform how capital markets operate,” said FSA Commissioner Junichi Nakajima. “Our goal is to create a system that fosters innovation while maintaining investor protection and market stability.”
According to the FSA, the framework will include detailed provisions for smart contract auditing, custodial asset segregation, and secondary market supervision. The regulator emphasized that tokenized securities will remain subject to Japan’s Financial Instruments and Exchange Act, ensuring parity with traditional financial assets.
Industry insiders view this as a natural progression for Japan’s digital asset ecosystem, which has already seen major players like SBI Holdings and Nomura experiment with tokenized bonds and digital funds. Nomura’s digital arm, Laser Digital, has been particularly active, recently issuing a ¥10 billion ($68 million) tokenized bond that was settled entirely on blockchain.
If adopted, the framework could allow securities to be issued and traded in near real-time, drastically reducing settlement risk and administrative costs. This could open up new investment opportunities for smaller firms and individual investors while increasing liquidity in Japan’s capital markets.
“Tokenization allows fractional ownership, which makes it easier for investors to access high-value assets like real estate or corporate debt,” explained Kenji Yamamoto, an analyst at Tokyo-based Monex Research. “Japan’s move gives credibility to the idea that blockchain can coexist with traditional finance, not replace it.”
The FSA also plans to collaborate with international regulators to ensure cross-border interoperability of tokenized securities, particularly within the Asia-Pacific region. Discussions are reportedly underway with Singapore’s Monetary Authority (MAS) and Hong Kong’s Securities and Futures Commission (SFC) to harmonize reporting and compliance standards.
Market participants have welcomed the proposal, calling it a sign of confidence in blockchain’s long-term role in global finance. The Japan Blockchain Association (JBA) praised the move, noting that clear regulations could accelerate institutional adoption and attract foreign investment into the country’s growing digital asset sector.
Public consultation for the framework will remain open until November 2025, with a final version expected by early 2026. If approved, Japan could become one of the first major economies to formally regulate tokenized securities—a move likely to influence other G7 nations exploring similar frameworks.
By balancing innovation with oversight, Japan’s FSA is positioning the nation as a frontrunner in the global race to modernize financial markets through blockchain technology.
