Zenith Joins Japan JGB Tokenization Group, Expands Work With Major Banks
Summary
- Zenith said it has joined the Tokenized JGB and On-Chain Repo Working Group to advance tokenization of Japanese government bonds, or JGBs.
- The group said it aims to build a stablecoin-based on-chain repo transaction infrastructure backed by JGB collateral, with a focus on instant settlement and broader global access.
- Zenith said it plans to contribute to protocol design and compliant infrastructure as it seeks to reshape liquidity in Japan's roughly $1.6 trillion JGB repo market.
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Zenith, an Ethereum Virtual Machine-compatible project built on the Canton Network, is deepening collaboration with major Japanese banks on the tokenization of Japanese government bonds, or JGBs.
The company said June 24 that it had joined the Tokenized JGB and On-Chain Repo Working Group. The group was established last month to explore tokenizing JGBs and moving stablecoin-based repo transactions backed by those bonds onto blockchain rails.
The working group was launched under Japan's Digital Asset Co-Creation Consortium, or DCC. Participants include Mitsubishi UFJ Bank, Mizuho Bank, Sumitomo Mitsui Banking Corp., SBI Securities, BlackRock Japan and Market Innovation & Research, a unit of Japan Exchange Group.
The group's core objective is to build on-chain repo infrastructure for institutional investors using tokenized JGBs. The effort is aimed at enabling instant settlement, 24-hour trading and broader global access in Japan's JGB repo market.
The consortium sees tokenization as a way to create new liquidity in Japan's government bond market. Zenith estimates the JGB repo market at about $1.6 trillion, or roughly 10% of the global sovereign bond repo market.
Cumulative issuance of tokenized securities in Japan has already exceeded $2.2 billion. So far, those offerings have been concentrated in real estate, a Zenith representative said, adding that the new working group is an attempt to expand Japan's tokenized securities market into institutional government bond tokenization.
The working group plans to publish a comprehensive report on its research in October. It also aims to advance a pilot program for JGB tokenization later this year. Zenith said it expects to contribute to protocol design and the development of compliant infrastructure.
Heslin Kim, Zenith's co-founder and chief business officer, said joining the group alongside Japan's financial institutions marked a chance to help tokenize JGBs. The collaboration is at the forefront of the broader push to bring real-world assets on-chain, he added.
Through the working group, the liquidity of Japan's $1.6 trillion JGB repo market could be transformed for global investors, Kim said.
