Nomura Securities and Daiwa Securities are launching a proof of concept for using stablecoins for securities settlement with Japan’s big 3 banks, MUFG, SMBC and Mizuho. The trials will take place in the Japanese Financial Services Agency’s (FSA) Fintech PoC Hub, a regulatory sandbox, and more specifically, as a Payments Innovation Project (PIP). PIPs explore the use of distributed ledger technology (DLT) for payments, including remittances and delivery versus payment (DvP), as in this case.
The stablecoin to be used will be a joint issuance that is already being explored by MUFG, SMBC and Mizuho, referred to as the “3 Mega SC”. On the securities front, the aim is to use blockchain and smart contracts to synchronize the book entry transfers of conventional securities with their on-chain representations which will include government bonds, listed stocks, investment trusts and corporate bonds. The announcement did not use the term “tokenization,” leaving it unclear whether the securities will be fully tokenized or whether smart contracts will simply manage the workflow for conventional securities. The PoC’s goal is to achieve atomic settlement, the simultaneous exchange of stablecoins and securities.
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