Japan's Liberal Democratic Party Policy Research Council approved the "Next-Generation AI and On-Chain Finance" proposal on May 19, 2026, positioning on-chain finance—including stablecoins and tokenized deposits—as the country's next-generation national financial infrastructure. The proposal is being considered for inclusion in Japan's "Basic Policy on Economic and Fiscal Management and Reform 2026," a document that shapes the country's budget direction and is typically approved by Cabinet in June. Japan's government is treating blockchain as core economic infrastructure, not as a technology experiment.
## What the Proposal Actually Calls For
The policy recommendations include specific implementation targets. Key elements are:
- Tokenization of Bank of Japan current accounts: The central bank has been requested to clarify implementation issues and publish a roadmap by year-end.
- Bank-issued yen stablecoins: The proposal calls for accelerating their development, clarifying their legal status for salary and tax payments, and developing international compatibility for cross-border transactions.
- Finance as growth investment area: Finance has been designated as the "18th growth investment area," placing it alongside AI, semiconductors, quantum computing, and aerospace in Japan's national growth strategy. The Financial Services Agency will lead a five-year roadmap backed by public-private partnerships and investment commitments.
- On-chain settlement infrastructure: The proposal highlights on-chain settlement as foundational technology for achieving T+0 instant settlement on the Tokyo Stock Exchange, which has an annual trading volume of approximately 1,600 trillion yen.
## The AI-Blockchain Connection
The proposal's forward-looking element centers on 24/7 agentic commerce. House of Representatives member Masaaki Taira, who initiated the project team in March, stated: "This is not something that will happen in 5 or 10 years, but a change that will occur within a few years."
The underlying logic is that AI agents cannot hold traditional bank accounts and require programmable, always-on payment rails to operate at scale. Blockchain-based stablecoins and tokenized deposits provide this infrastructure, enabling AI to choose products, execute payments, manage assets, and settle transactions without human intervention.
The proposal also calls for a new "AI/On-Chain Finance Asia Policy Dialogue Framework" to position Japan to lead regional rule-making on RWA interoperability and KYC/AML standards across Asia.
## Implementation and Market Impact
Japan's policy approval creates a government-backed framework for institutional adoption. A bank-issued yen stablecoin with legal clarity for salary and tax payments represents a significant stablecoin development. The five-year roadmap and public-private investment framework provide a defined build environment. Tokenized real estate, securities, receivables, and deposits are all explicitly supported by the policy direction.
