At the WebX 2025 conference in Tokyo, Japan's Finance Minister Katsunobu Kato officially supported the inclusion of crypto assets in diversified investment portfolios. "Although crypto assets carry high volatility risks, with the establishment of a proper investment environment, they can become part of diversified investments," Kato stated in his keynote speech. This statement marks a significant shift in the Japanese government's position on digital assets, especially in light of the country's economic challenges.

Japan faces a huge debt burden – 234.9% of GDP as of March 2025, leading to "financial repression" due to low interest rates and yen devaluation. Traditional assets, such as bonds and deposits, yield minimal returns, making cryptocurrencies an attractive alternative for diversification. The government plans reforms for 2026: reclassifying crypto as financial products under the Financial Instruments and Exchange Act (FIEA), which will allow the launch of spot Bitcoin ETFs.

A key change is tax reform. Currently, profits from crypto are taxed at a progressive rate up to 55%, but the Liberal Democratic Party (LDP) promises a fixed rate of 20%, similar to stocks, and the ability to carry losses over three years. This will lower barriers for investors and attract institutional capital. Additionally, rules against insider trading, similar to those in the stock market, will be introduced to protect against abuses.

Japan has over 12 million active crypto accounts with assets of 5 trillion yen, highlighting the market's potential. Companies like Metaplanet are already investing in Bitcoin and entering the FTSE Japan Index, while SBI Group collaborates with Chainlink and Ripple. The approval of the first stablecoin JPYC in the fall of 2025 will strengthen cross-border transactions and liquidity.

These reforms make Japan one of the most attractive jurisdictions for crypto, competing with Singapore and Hong Kong. Kato's support adds legitimacy to the asset, driving innovation without excessive regulation. For global investors, this is a signal to enter the Asian crypto market.

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