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Progmat, the platform that underlies roughly two-thirds of Japan's security token market by issuance value, completed its migration to a dedicated Avalanche blockchain at the end of June 2026. The move transfers approximately ¥452 billion (about $2.95 billion USD) in tokenized assets, primarily real estate-backed securities and corporate bonds, off Corda 5, an enterprise distributed ledger made by R3, and onto a new Avalanche L1 (application-specific blockchain) the company calls Project Keystone. The migration began in autumn 2025.

Progmat was founded by Mitsubishi UFJ Financial Group (MUFG), Japan's largest bank. MUFG used the platform to issue Japan's first digital bond, a ¥10 billion security token, and the company now operates as neutral shared infrastructure for security token issuance across multiple financial institutions. Progmat currently accounts for roughly 64.6% of Japan's total security token issuance value and about 53.8% of active projects in the market. Japan's overall security token market is projected to reach ¥1.05 trillion (over $7 billion) by end of 2026, according to Avalanche's own network communications; that projection originates from Ava Labs, which has a commercial interest in the story, and has not been independently corroborated.

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Why Leave Corda?

Corda was designed for permissioned banking consortia. It works well for keeping transactions private between known counterparties, but it is isolated from the broader blockchain ecosystem. Progmat's new Avalanche L1 is EVM-compatible, meaning it speaks the same technical language as Ethereum and thousands of applications, wallets, and protocols built for it. Progmat retains regulatory control by running a permissioned validator set that can comply with rules set by Japan's Financial Services Agency (FSA). At the same time, the platform can now connect to public chains and external settlement infrastructure.

Tatsuya Saito, Progmat's CEO, described the direction in a public statement: "We're moving Progmat ST from Corda5 to Avalanche, making all ST deals EVM-compatible and progressively permissionless."

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New Settlement Capabilities

The migration introduces two settlement mechanisms that were not available under the previous architecture for cross-chain and cross-ecosystem use. The first is Delivery versus Payment (DvP), where a security transfer and its corresponding cash settlement happen simultaneously, eliminating counterparty risk. The second is Payment versus Payment (PvP), which allows stablecoins denominated in different currencies to settle against each other across jurisdictions at the same time.

Both are enabled through a combination of Avalanche's Interchain Messaging system and a cross-chain bridge built by Datachain using IBC/LCP protocol technology. For cross-border stablecoin transfers, Progmat and Datachain use a burn-and-mint method: tokens are destroyed on one chain and an equivalent amount is created on the destination chain. According to Datachain, this made Progmat's stablecoin system only the second implementation of this mechanism globally, alongside Circle's USDC. That claim has not been independently verified.

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On-Chain Context

AVAX, Avalanche's native token, was trading between $6.44 and $6.76 as of July 2026, giving the network a market capitalization of roughly $2.8 to $2.9 billion. That figure is notable because the tokenized assets Progmat just migrated onto Avalanche represent a volume that exceeds the network's entire market cap. The comparison underscores that this migration is driven by infrastructure requirements and regulatory architecture, not by speculation on AVAX's price.

Avalanche's total real-world asset (RWA) value locked across its ecosystem has crossed $1.3 billion. The network's Granite upgrade delivered sub-two-second settlement finality, a threshold with direct relevance to institutional security token transactions where timing certainty affects counterparty risk. A separate protocol upgrade called Octane (April 2025) reduced base transaction fees by roughly 99.6%, lowering the cost of high-frequency and small-denomination token operations on the chain.

Globally, the real-world asset tokenization market has surpassed $26 billion in value locked, excluding stablecoins, as of mid-2026. Progmat's $2.95 billion migration represents one of the largest single institutional contributions to that total, and places Japan at the center of the sector's current growth.

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Regional Implications

For Asia, the Progmat migration establishes a working template for FSA-compliant institutional tokenization that other markets can reference. South Korean institutions including Mirae Asset and Woori Bank are already operating on Avalanche. SMBC Group, one of Japan's major banking conglomerates, and Hong Kong-based Fosun Wealth have each signaled Avalanche as Asia's preferred institutional L1, though the confirmed extent of their on-chain activity warrants independent verification before those signals are treated as firm commitments. A consortium involving Progmat, Datachain, IDA, and TOKI is actively exploring stablecoin-based settlement for Hong Kong-Japan trade corridors.

The architecture is also relevant to South Asia. India is the world's largest remittance recipient, and the Securities and Exchange Board of India (SEBI) has been examining digital asset frameworks and tokenization pilots, establishing a policy trajectory that could benefit from infrastructure of this kind. As DvP and PvP settlement matures on Avalanche, it could support lower-cost India-Japan payment flows. In Africa, regulators in Kenya (which signed digital assets legislation in October 2025) and South Africa, where the Intergovernmental Fintech Working Group (IFWG) is developing stablecoin and tokenization frameworks, are building the regulatory conditions for EVM-native settlement rails. Markets without deep legacy financial plumbing can, in some cases, adopt those rails faster than established ones. Jesse Knutson, Head of Operations at Bitfinex, identified this dynamic in a broader analysis of emerging market adoption: "Emerging markets also tend to 'leapfrog' infrastructure that holds back developed markets, adopting digital rails, including stablecoin settlement, faster than markets with entrenched legacy plumbing."

For developers everywhere, the shift from Corda to an EVM-compatible chain removes a hard technical barrier. Any team writing Solidity smart contracts can now, in principle, build tools that interface with Japan's largest regulated security token platform. Corda required bespoke enterprise development with restricted access. The new stack does not impose those same barriers at the application layer, though the validator set remains permissioned, meaning actual token issuance and participation as a network node still require FSA-regulated status. Avalanche's AvaCloud tooling and Datachain's IBC/LCP bridge are available as open infrastructure for teams building on top of the chain.

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What Comes Next

Japan's regulatory environment is also shifting in ways that will shape adoption. In April 2026, Japan's Cabinet approved an FSA-led bill that will reduce the capital gains tax rate on crypto assets to a flat 20%, down from a progressive rate that previously reached as high as 55%. The same legislation introduced stricter token issuer disclosure requirements and liability reserves for exchanges, provisions that are material to the institutional participants most likely to engage with Progmat's expanded infrastructure. The combined effect of a lower tax burden and tighter compliance obligations will determine how quickly that participation accelerates, and analysts have not yet reached consensus on the net direction.

Progmat's own roadmap extends beyond the domestic market. Project Keystone is explicitly designed to enable cross-border settlement between Japanese and European stablecoin systems, and the DvP and PvP infrastructure now in place forms the technical foundation for that capability. A timeline for those cross-border connections to go live has not yet been announced publicly.