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

• According to a Nikkei report cited by Cointelegraph, Japan plans to prepare security-token local bonds for 2026 legislation.
• Experts say digital bonds could offer monetary, non-monetary, and social returns.
• President Takaichi warned that Japan’s debt remains high, rejecting irresponsible bond issuance or tax cuts.

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.

Japan’s Prime Minister Emphasizes Fiscal Discipline

The decision comes as Prime Minister Sanae Takaichi has stressed the need for fiscal control and advised against issuing bonds irresponsibly, according to a separate Nikkei report. Prime Minister Sanae Takaichi has noted that Japan's government debt remains "high" and has ruled out irresponsible bond issuance or tax cuts. She stressed the need to keep the market's faith in the yen and the country's finances.

After the Bank of Japan raised interest rates, Bitcoin and the rest of the crypto market saw some respite with prices moving higher on Monday. Bitcoin was trading at $87,557.38, down 2.5% over the past day. On Stocktwits, retail sentiment around Bitcoin remained in ‘extremely bearish’ territory over the past day. Chatter around the coin changed from ‘low’ to ‘normal’ levels over the past day.

Read also: Solana and Cardano Co-Founders Back Calls For Interoperability Bridge

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