Mitsubishi UFJ Financial Group, Inc. (President & Group CEO: Junichi Hanzawa; “MUFG”), Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (President & CEO: Hiroyuki Seki; “Mitsubishi UFJ Morgan Stanley Securities”), Mitsubishi UFJ Trust and Banking Corporation (President: Hiroshi Kubota; “Mitsubishi UFJ Trust and Banking”), and MUFG Bank, Ltd. (President & CEO: Masakazu Osawa; “MUFG Bank”) (together, the “four MUFG companies”) announce that, together with Digital Asset Holdings, LLC (CEO: Yuval Rooz; “DA”) and Progmat, Inc. (CEO: Tatsuya Saito; “Progmat”), they are launching a collaboration on a proof-of-concept (“PoC” ) for bringing on-chain Japanese Government Bond (“JGB”) repo transactions using Canton Network, a blockchain purpose-built for institutional finance.

1. Background and Objectives of the PoC

As an application of blockchain technology in financial markets, the domestic primary market has seen growing issuance of security tokens backed by bonds, real estate, and other assets. More recently, overseas markets have advanced PoC projects and practical implementations that bring secondary-market financial transactions on-chain, aiming to improve operational efficiency through automation of the transaction lifecycle and to enhance funding and capital efficiency through real-time, 24/7 settlement. In Europe and the United States in particular, PoC projects for intraday (starting and ending on the same trading day) government bond repo transactions have rapidly expanded, and commercial services for intraday U.S. Treasury repo are already in operation.

Given their high creditworthiness and liquidity, JGBs are widely used as collateral for repo transactions by market participants in Japan and overseas, and momentum and expectations for bringing them on-chain are growing. MUFG has to date pursued a range of on-chain finance initiatives and, as Japan’s largest financial group handling JGBs, provides JGB liquidity and settlement-related services. We believe that continuing to offer these same functions and services on-chain is essential to the development of financial markets and to maintaining and enhancing convenience for investors. Against this backdrop, MUFG is launching the collaboration described below on a PoC for bringing JGB repo transactions on-chain. Toward the PoC and its subsequent implementation in society, we intend to engage in appropriate, in-depth communication with the relevant authorities, and to work together not only within MUFG but with a wide range of market participants, including financial institutions in Japan and overseas. We also aim to further develop the projects in close collaboration with Morgan Stanley, our global strategic alliance partner.

This PoC will be conducted as part of a series of pilot projects selected in February 2026 under the “Payment Innovation Project” led by the Financial Services Agency (FSA) of Japan.

2. Overview of the PoC (On-Chain Repo Transactions)

• On-Chain Simultaneous Settlement (DvP) of JGBs and Digital Money^*1
  Scope: Drawing on precedents, and while preserving the legal nature of JGBs as book-entry transfer bonds, the transfer registration ledger held by the account management institution would be updated in conjunction with the blockchain; use of tokenized deposits or stablecoins as digital money is also being considered
• On-Chain Implementation of the Full Repo Transaction Lifecycle
  Scope: Through a mechanism similar to that described in 1, the lending protocol^*2 provided by Secured Finance AG (Founder & CEO: Masakazu Kikuchi; “SF”) would be used to automate the full sequence of processes
• Expected Benefits
  • Operational efficiency through automation of the full repo transaction lifecycle, among other benefits

• • Improved funding and capital efficiency through real-time intraday repo transactions and expanded settlement window
• Roles of Participating Companies
  • DA: Provides the tokenization framework built on the “Canton Network” blockchain and supports token issuance and management
  • Progmat: Analyzes existing practices and provides support, including productization, for applying blockchain technology to JGB book-entry transfers and their use in repo transactions
  • SF: Implements the repo transaction lifecycle within the lending protocol (On-Chain Implementation of the Full Repo Transaction Lifecycle)

Roles of MUFG Group Companies

Market Participants: Mitsubishi UFJ Morgan Stanley Securities, MUFG Bank

Account Management Institutions: MUFG Bank, Mitsubishi UFJ Trust and Banking

Deposit-Taking Institution: MUFG Bank

Source: MUFG