JBA Tables Eight Onchain Finance Proposals at LDP Blockchain Caucus Meeting

US Trip Report at the 37th Meeting

Japan's ruling-party Blockchain Promotion Caucus held its 37th meeting in Tokyo on Tuesday, October 27, with the central agenda item a report on the fact-finding trip the group made to the United States in late August. The visit ran from August 23 to 29 and took delegates to Washington, DC and New York. Caucus vice chair Masaaki Taira, secretary-general Junichi Kanda and executives of the Japan Blockchain Association (JBA) made the journey, while officials from the Financial Services Agency, the Digital Agency and the Ministry of Economy, Trade and Industry attended the meeting alongside the party's lawmakers. Leading the report was Yuzo Kano, the JBA's representative director and chief executive of the Tokyo exchange bitFlyer. His schedule in Washington included the Commodity Futures Trading Commission, the Securities and Exchange Commission, the US Treasury, the World Bank and the International Monetary Fund; in New York the group met Circle, issuer of the dollar-backed stablecoin USDC, JPMorgan, BlackRock, the prediction markets Kalshi and Polymarket, and the analytics firm Chainalysis. The Treasury framed innovation as a major source of economic growth, and IMF staff told the delegation that demand for stablecoins in developed economies rests on settlement speed and programmability rather than fees. JPMorgan, in Kano's reading, has moved blockchain from research topic to operating business, and it sized its main constraint as ecosystem formation, which it sees as requiring participation from exchanges and clearing houses. Chainalysis reported that stablecoins accounted for 84% of fraudulent transaction value in 2025 while illicit activity stayed below 1% of all transactions. At the SEC, commissioner Hester Peirce, known in the industry as “Crypto Mom,” told the group that access to a diverse set of financial products is itself investor protection, an answer she gave when Kano asked whether innovation or law should come first. The SEC's position on AI failures was more direct: the human using the tool bears the responsibility.

Eight Proposals from the JBA

Prediction markets drew the sharpest exchange of views. Kano reported that the CFTC classifies event contracts as derivatives rather than gambling and claims sole jurisdiction over them, but a lawyer's opinion presented to the caucus concluded that hosting US-style prediction markets in Japan would require revising the criminal code's gambling provisions. Kanda added nuance: weather derivatives look straightforward, sports markets would draw non-hedging participants, and election markets raise fairness questions, though research he cited shows electoral outcomes can be predicted accurately. The JBA then tabled eight proposals. The first asks for clarity on the legal standing of DeFi, spelling out what may and may not be done at a decentralized exchange, from running a liquidity pool to yield farming. Another maps when AI performing investment-management work triggers industry regulation. Kano pressed hardest on defining digital assets as property in law, citing UK legislation and calling for an “electronic property right”: a customer holds a repayment claim against an exchange for Bitcoin deposited there, but assets the customer manages through private keys or a seed phrase backup have unclear legal status, leaving theft victims with nothing but a damages claim. The proposals also asked for rules making the on-chain record definitive proof of a transfer, set either through tamper-resistance requirements or a certification scheme rather than designating one chain, which would leave networks competing on tokenomics instead of legal favor. Completing the list were stablecoin use for tax payments, a review of the 1,250% Basel risk weight on crypto, and domestic CBDC development. FSA officials described a study group on digital and decentralized finance that opened the 2026 administrative year on October 20 and will take up DeFi, wallets and asset tokenization, with an interim summary and a public-private roadmap planned through the AI-era Onchain Finance Forum in early 2027. Caucus chair Seiji Kihara, who also leads the party's AI and on-chain finance project team, said trying to enact every proposal at once would take time, since Civil Code changes require coordination with the Justice Ministry. He proposed starting with the securities transfer system (JASDEC) and the treatment of paper instruments under the Investment Trust Act, while conceding that whether NFTs and crypto assets count as legal “things” will have to be settled eventually.

What the Phased Reform Means

The property-right proposal carries the most weight. Until Japanese law says what a self-custodied asset is, insolvency and theft cases keep resolving through damages claims rather than recovery, and institutional custody products stay hard to build. The sequencing Kihara laid out gives the real timeline: anything touching the Civil Code goes to the Justice Ministry and slows, so the early-2027 interim summary will likely advance transfer-of-rights rules and tokenized-fund treatment before property classification is settled. The Basel review, if adopted, would move bank capital treatment of crypto by more than any retail measure now on the table.