Japan’s ruling administration, led by the Liberal Democratic Party (LDP), has officially given the greenlight to a new policy concept that leverages AI and blockchain technology to overhaul the island nation’s financial infrastructure.
Japan taps AI, blockchain to revamp financial infrastructure
Earlier on Tuesday, Japan’s LDP gave the go-ahead to an ambitious proposal titled “Next-generation AI & Onchain Finance Concept” which seeks to completely change the country’s financial infrastructure using AI and blockchain technology.
A project team within the LDP, led by party member Seiji Kihara, spearheaded the initiative. The draft was submitted to the LDP earlier in May, and received the formal approval from LDP’s Policy Research Council in the early hours of Tuesday.
Notably, the proposal aims to prioritize the development of an automated financial infrastructure that facilitates round the clock agentic commerce by using blockchain networks.
According to the proposal, AI is projected to autonomously handpick products and services instead of humans. As a result, distributed ledger technology’s verifiable, tamper-proof, and programmable traits become all the more valuable.
In addition, the proposal lays the groundwork for tokenized deposits and Japanese yen-denominated stablecoins. Importantly, it mentions that it is “essential” to tokenize the Bank of Japan’s current account deposits.
The proposal goes on to emphasize the significance of legal clarity and reducing systemic risks when it comes to emerging financial tools like fiat-pegged cryptocurrencies.
It also reiterated its support for the joint issuance of stablecoins under three Japanese megabanks – namely Mizuho Bank, MUFG, and SMBC.
Finally, the proposal floated the idea for a framework to bolster partnerships with other Asian countries on blockchain and AI initiatives.
It also requested Japan’s financial watchdog, the Financial Services Agency (FSA) to develop a 5-year roadmap to foster investment in projects that involve both the private and public sectors.
Stablecoin adoption in Asia picks momentum
As evident from Japan’s attempt at making stablecoin adoption more mainstream, the rest of Asia is also drawing inspiration. Earlier this month, on May 7, Kraken’s parent firm Payward acquired a Hong-Kong stablecoin firm Reap for $600M.
In the same vein, privacy-first stablecoin neobank Zoth and Bakkt signed an MOU on May 5 for a $1B push for stablecoin adoption across the MENA and South Asia region.