Japan’s Finance Minister supports crypto in investment portfolios, urging balanced regulation, stablecoins, and tax reforms to boost adoption.
Japan’s Finance Minister Katsunobu Kato has endorsed cryptocurrencies as part of diversified investment portfolios. Speaking at the Web3 Conference WebX 2025 in Tokyo on August 25, Kato discussed the prospects of crypto assets. He observed that they have a high volatility, but the right investment climate would see them become a good investment opportunity. This declaration is a great transition in the Japanese attitude towards digital assets.
Kato Supports Safer Crypto Trading and Innovation
According to Bloomberg Japan, Kato stressed the importance of having a balanced regulatory framework. He is keen to encourage innovation and provide a safe trading environment. Crypto assets are risky, but through appropriate regulation, they can be included in diversified investments, Kato said. He also stated an increase in the number of crypto users in Japan, which meant that there was a necessity to improve the conditions of trading.
This approval is in line with the recent trends in crypto in Japan. Japan, as an example, is planning to license the first yen-pegged stablecoin in the fall of 2025 by the Financial Services Agency (FSA). This stablecoin is backed by government bonds and should provide an alternative source of low volatility to investors. It would make cross-border transfers easier and able to attract institutional attention. Also, FSA is seeking a flat tax rate of 20% on crypto gains instead of the progressive rate of up to 55%. Such a modification, which is suggested to be introduced in 2026, would make investing in cryptocurrencies more attractive.
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Further, the Liberal Democratic Party (LDP), which is in power in Japan, is in favor of these reforms. The LDP would like to treat crypto as a financial product under the Financial Instruments and Exchange Act. This would bring in harsh regulations, such as insider trading regulations, to safeguard the investors. Another thing the party wants to do by the middle of 2026 is to introduce spot Bitcoin ETFs, which provide an official mechanism to invest in cryptocurrency. These actions demonstrate that Japan is eager to become a country that is friendly to the idea of crypto.
JPYC Stablecoin and Tax Reforms to Boost Crypto Investment
Meanwhile, Japanese financial firms are embracing blockchain technology. Recently, SBI Holdings joined Forces with Chainlink and other companies in formulating crypto tools to be used by the financial institutions in Asia. These alliances are meant to increase the liquidity and safety of the crypto market.
However, there are problems. Crypto markets are unpredictable and regulatory changes may be struggling. Kato cautioned against excessive regulations that would stifle innovation. He wants Japan to achieve growth and safety as one of the important elements to remain competitive in the world.
Finally, Kato is a bold advocate of the use of crypto in investment portfolios. It is part of the larger trend of Japan to incorporate digital assets into its financial system. As further reforms, including the upcoming JPYC stablecoin and reduced taxation, are being implemented, Japan plans to become a leader in the use of cryptocurrencies. These developments may draw retail and institutional investors, increasing the presence of Japan in the worldwide digital asset market.
