Japan’s Local Governments May Soon Issue Bonds On-Chain: Report

In 2026, Japan plans to introduce blockchain-based local government bonds and regulations to increase funding flexibility.

On Tuesday, the Japanese government is prepared to allow local government bonds to be issued as digital securities, paving the way for on-chain public finance, according to a Nikkei report.

According to Cointelegraph Japan, citing a report from Nikkei, the administration intends to begin formal preparations to issue local government bonds as security tokens in 2026 and to submit associated legislation to the regular Diet. 

Local governments have requested more flexible funding options, and specific steps are expected to be announced as early as this month. 

Digital securities use blockchain technology to electronically maintain securities rights. This makes it possible to issue and settle securities more quickly and without the need for intermediaries. The Japanese newspaper said the system might also allow people to track investor information in real time.

Haruo Narimoto, a lawyer who specializes in security tokens, reportedly posted on Facebook about the trend and discussed some of the key qualities of digital local government bonds. Narimoto stated that returns might be classified into three categories: monetary, non-monetary benefits, and social or psychological returns, allowing communities to raise funding directly from citizens.

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