Japanese Finance Minister designates 2026 as the "Digital Yen Year": Cryptocurrency tax rates halved, domestic ETFs put on the agenda

Japan’s official authorities have officially sounded the horn for the integration of crypto finance. Finance Minister Katayama Satsuki delivered a speech on the first trading day of the New Year at the Tokyo Stock Exchange, clearly positioning 2026 as the “Digital Year,” and releasing a series of significant policy signals. From a substantial tax rate reduction to the reclassification of 105 tokens, and prospects for domestic crypto ETFs, Japan’s crypto policy is undergoing a fundamental shift from defense to offense.

Three Core Measures of Policy Shift

Tax Rate Reform: from 55% down to 20%

This is the most direct benefit of this reform. Japanese regulators are studying to lower the maximum tax rate on cryptocurrency investments from the current 55% to about 20%, aligning with stock investment tax rates. This adjustment is highly significant. A tax rate as high as 55% was once a major factor suppressing retail Japanese investors’ participation in crypto assets. Once lowered to 20%, the attractiveness of investment returns will be significantly enhanced, providing a substantial stimulus for both individual investors and institutional capital inflows.

Institutional Inclusion of 105 Tokens

Japan’s authorities plan to reclassify 105 mainstream cryptocurrencies, including Bitcoin and Ethereum, as “financial products” within the existing financial regulatory framework. This is not just a classification issue but an institutional recognition of transforming crypto assets from “special assets” to “mainstream financial products.” Once implemented, these tokens will have more opportunities for application in stock exchanges, institutional investments, and compliant financial scenarios.

Clear Outlook for ETF Prospects

Satsuki Katayama emphasized the success of US crypto ETFs in her speech, hinting that Japan may also launch domestic crypto ETFs in the future. She pointed out that in the US, Bitcoin and other crypto ETFs have become important tools for investors to hedge inflation. Although Japan has not yet launched domestic crypto ETFs, related discussions are heating up, indicating that the possibility of launch has moved from theoretical exploration to actual planning.

Practical Impact of Policy Reforms on the Market

According to news reports, the Japan Financial Services Agency has also continued to release other positive signals over the past year, including discussions on allowing banks to hold and trade crypto assets, and approval of the first yen-pegged stablecoin JPYC. These measures collectively point in one direction: Japan is systematically building a crypto financial ecosystem.

The Practical Significance of Domestic Stablecoin JPYC

JPYC, as Japan’s first approved yen-pegged stablecoin, was launched in June 2022. Although its current circulation is zero and the total supply is 2.14 billion coins, its existence itself is an important part of Japan’s crypto financial infrastructure. The launch of the stablecoin provides a fiat bridge for Japan’s domestic crypto ecosystem, which is crucial for future institutional participation and capital flow.

Why Now?

Satsuki Katayama’s designation of 2026 as the “Digital Year” is no coincidence. Japan faces long-term structural deflation issues, and crypto assets and digital finance are seen as important tools to address this challenge. By promoting cryptocurrencies into the traditional financial system, Japan aims to achieve two goals: first, attract global crypto capital and Web3 enterprises; second, provide ordinary citizens with an inflation-hedging investment channel. This policy shift reflects Japan’s renewed recognition of the strategic importance of crypto finance.

Future Outlook

Based on current policy signals, it can be expected that: if the tax rate reform is implemented, it will significantly lower the barriers to crypto asset investment; the reclassification of 105 tokens will provide a legal basis for exchanges, banks, and other institutions to participate compliantly; the launch of domestic crypto ETFs is expected to make progress within this year. What will be the cumulative effect of these reforms? Japan is likely to occupy a more important position in the Asian crypto financial landscape, differentiating itself from the US market.

Summary

Japan’s series of policy shifts mark a transition from cautious defense to active guidance in its crypto policy. From halving tax rates to institutional inclusion, from stablecoin approval to ETF prospects, Japan is redefining its role in global crypto finance through concrete actions. As the regulatory framework gradually clarifies, the attractiveness of Japan’s crypto market is expected to greatly increase. Future points of focus include: when the tax rate reform will officially take effect, when domestic crypto ETFs will be launched, and the actual impact of these policies on global crypto capital flows.