Japan’s Finance Minister Katsunobu Kato is urging the creation of a friendlier environment for digital assets. He believes cryptocurrencies can play a role in diversified portfolios if safeguards are in place. Speaking at the WebX2025 digital assets forum in Tokyo, Kato expanded on this vision. He acknowledged the risks linked to digital currencies, including extreme volatility. However, he argued that these risks can be controlled if the right investment frameworks are introduced.“Cryptocurrencies could be part of diversified investments,” Kato said. He added that clear rules and a supportive ecosystem would help investors adopt them with greater confidence.He also warned against excessive restrictions that could block innovation and discourage entrepreneurs. According to Kato, the ministry’s goal is to design a framework balancing safety, innovation, and global competitiveness.Debt Burden Adds Urgency to Alternative InvestmentsKato’s remarks came at a time when Japan is dealing with a debt-to-GDP ratio surpassing 200%. This is one of the highest levels among developed nations. Economists fear that the burden could trigger financial repression, where governments manage debt using inflation, low interest rates, or currency depreciation.Such conditions hurt returns on traditional safe assets such as government bonds and savings deposits. For many investors, this strengthens the case for alternative holdings such as cryptocurrencies, which provide potential real returns and portfolio diversification.Regulatory Push: Japan Approves Yen-Backed StablecoinJapan has also made progress on regulation. The Financial Services Agency (FSA) recently approved the issuance of the first yen-denominated stablecoin . The coin, issued through Tokyo-based fintech JPYC, is expected to play a significant role in the domestic and international markets.Analysts say yen-backed stablecoins can simplify cross-border settlements and attract institutional investors. Additionally, they can enhance liquidity for government bonds by serving as reliable collateral.“Yen stablecoins can boost efficiency and build trust among institutions,” said Jamie Elkaleh, CMO at Bitget Wallet.Taxation and Policy Reforms Under ReviewJapan’s crypto investors currently face heavy taxation, with realized gains taxed at a maximum rate of 55%. Policymakers are now considering major reforms, including a separate taxation bracket that would lower the rate to 20%, aligning it closer with equity investments.Meanwhile, the ruling Liberal Democratic Party (LDP) has proposed reforms to prevent insider trading in digital assets. These measures would apply rules similar to those in the stock market, ensuring that malicious actors cannot profit from confidential information.Such reforms are seen as crucial steps toward making Japan’s crypto market safer, fairer, and more attractive to both local and international investors.Global Leaders Converge at WebX2025The WebX2025 forum, held on August 25–26 in Tokyo, highlighted Japan’s growing importance in the global digital assets sector. The event confirmed the presence of Prime Minister Shigeru Ishiba, Finance Minister Katsunobu Kato, and Tokyo’s Governor, along with many influential figures from the global crypto community.Prominent industry leaders such as Changpeng “CZ” Zhao of Binance, Justin Sun of Tron, Galaxy Digital’s Mike Novogratz, and Arthur Hayes of Maelstrom were also in attendance.U.S. Business Interest: Trump-Linked Crypto ExpansionInternational business interest in Japan’s crypto market is also increasing. According to recent reports, Eric Trump is expected to attend the Metaplanet Shareholder Meeting in Tokyo next month, where new capital-raising options will be debated.In addition, American Bitcoin, a company backed by Eric Trump and Donald Trump Jr., has announced expansion plans in Japan and Hong Kong. Industry experts say the move signals growing foreign confidence in Japan’s evolving digital asset framework.Japan’s approach to digital assets reflects both caution and ambition. By advancing reforms while fostering innovation, the country is building a stronger framework for a more resilient and globally competitive cryptocurrency market.
