Japan’s Liberal Democratic Party kicked off a new project team on Tuesday dedicated to designing a national framework for AI-powered on-chain finance, marking Tokyo’s most ambitious legislative push yet into tokenized financial infrastructure.
The move signals that Japan’s political leadership is no longer treating blockchain finance as a niche issue — but as a structural economic priority requiring cross-ministerial coordination.
“Not a 5-to-10-Year Story”
The “Next-Generation AI and On-Chain Finance Vision Project Team” held its first meeting on Tuesday under the LDP’s Digital Society Promotion Headquarters. Former Digital Minister Taira Masaaki, who has led the LDP’s web3 policy agenda since 2023, founded the group. Chairing it is Kihara Seiji, a former Ministry of Finance official with a track record in blockchain policy and current chair of the LDP’s Parliamentary League for Blockchain Promotion. Murai Hideki, a former Deputy Chief Cabinet Secretary known within the LDP as “Mr. Secretary-General,” serves as secretary-general.
In an exclusive interview with NADA News ahead of the launch, Taira said the convergence of AI and blockchain would hit finance first and hardest. “This is not a 5-to-10-year story — it will happen within a few years,” he told the outlet.
Japan already has building blocks in place. JPYC, the country’s first yen-backed stablecoin, launched last October as a legally recognized electronic payment instrument. The three megabanks — MTUFG, SMBC, and Mizuho — are jointly developing a stablecoin. Japan Post Bank is advancing tokenized deposits using the DCJPY digital currency.
But Taira argues the pieces don’t yet form a coherent system. “The individual components are falling into place,” he said, “but there is no shared blueprint for how to connect them into a functioning financial system.”
The PT’s immediate goal is a white paper outlining the regulatory reforms needed — covering trust law, deposit insurance, and KYC frameworks — which would then feed into the LDP’s growth strategy and the government’s annual fiscal policy guidelines.
Putting Pressure on Regulators
Kihara’s appointment as chair is a deliberate choice. Taira said he “went to persuade” Kihara to take the role, arguing the task requires someone fluent in both finance and technology who can hold regulators accountable. In a prior YouTube appearance with Kihara, Taira stated directly that the PT’s formation would make the Financial Services Agency and Ministry of Finance “feel the pressure.”
Traditional financial institutions face what Taira calls a “double investment” dilemma — maintaining legacy systems like the Zengin network and SWIFT while simultaneously building blockchain infrastructure.
“They know they should do it,” he said, “but hesitate on the question of whether now is the right time.” A clear government vision, he argued, would give banks and securities firms the political cover to commit.