Japan’s crypto asset market has surpassed 12 million accounts, expanding rapidly. The government aims to expand adoption further through tax reforms, while maintaining regulations and protection.
This balance between innovation and security is crucial for Japan’s global competitiveness.
- Expansion of the Crypto Asset Market and User Trends
- Financial Transformation in the Web3 Era and the Role of Crypto Assets
- Japan’s Regulatory Framework and Market Growth
- Japan’s Position in Strengthening Global Competitiveness
- Tax Reform Directions for Crypto Assets
- Building an Ecosystem through Public-Private Collaboration
- Conclusion
Expansion of the Crypto Asset Market and User Trends
Japan’s crypto asset market has been growing rapidly, with over 12 million trading accounts opened nationwide as of 2025. This means that more than one in ten people in Japan hold a crypto account, a high adoption rate compared globally. This expansion has been supported by regulatory reforms, such as amendments to the Payment Services Act and the introduction of mandatory registration for crypto asset exchanges. These measures enforced asset segregation, improved security against leaks, and increased reliability. As a result, domestic investors and small businesses gained confidence and joined the market. Moreover, the launch of yen-pegged stablecoins has enhanced the convenience of crypto in payments. For example, when used in international trade, yen stablecoins allow transactions to be settled without foreign exchange risks, making payments faster and cheaper. This is especially beneficial for SMEs entering global markets. Beyond investment, crypto assets are being increasingly used for payments, remittances, and corporate transactions, ensuring the market will continue to expand.
Financial Transformation in the Web3 Era and the Role of Crypto Assets
The evolution of the internet can be divided into Web1.0, Web2.0, and Web3.0. Web1.0 was an era of static information viewing, Web2.0 enabled two-way interaction through SNS and mobile devices, and Web3.0 is now emerging with blockchain at its core. The key feature of Web3.0 is its decentralized structure, allowing contracts and transactions without central intermediaries. Users can directly manage their own assets and data. In finance, smart contracts enable automated settlements, while AI integration helps detect fraud and streamline operations. These innovations affect not only individuals but also corporate activities. For instance, companies can automate payments within supply chains, reducing errors and fraud. Meanwhile, investors gain access to micro-investments and international transactions at lower costs. As Finance Minister Shunichi Kato noted in his speech, “Finance and technology have always evolved together,” emphasizing that crypto assets could form the infrastructure of the next-generation financial system. The following table summarizes the characteristics of each internet phase:
| Era | Features | Impact on Finance |
|---|---|---|
| Web1.0 | Static information | Early internet banking |
| Web2.0 | SNS and mobile | Rise of fintech, payment apps |
| Web3.0 | Decentralization, blockchain-based | Smart contracts, crypto trading adoption |
Web3.0 represents a fundamental shift in the financial system, offering Japan an opportunity to develop a new growth driver.
Japan’s Regulatory Framework and Market Growth
Japan is recognized internationally as one of the first countries to implement crypto regulation. In 2017, a mandatory registration system for exchanges was introduced, followed in 2019 by the renaming of “virtual currencies” to “crypto assets,” stricter measures for customer asset protection, and priority return rules in bankruptcy. These measures boosted investor confidence, leading to a surge in new accounts across various age groups. However, excessive regulation could hinder innovation, creating the need for a flexible approach. For example, stablecoin issuance requires a balance between user protection and corporate convenience. The table below compares Japan’s framework with that of overseas markets:
| Category | Japan | Overseas (e.g., US) |
|---|---|---|
| Registration | Mandatory with FSA | Varies by state |
| Customer asset management | Segregation and priority return | Often incomplete |
| Terminology | Crypto assets | Virtual/crypto currencies |
| Reliability | High | Risk of hacks and fraud |
Japan’s regulations are strict but increase trust, which has been a foundation for market growth.
Japan’s Position in Strengthening Global Competitiveness
Globally, competition in crypto policy is intensifying. The US is debating new legislation, while the EU has introduced comprehensive regulations. Japan’s early regulatory framework earned it recognition, but overly strict rules could suppress domestic innovation. To maintain competitiveness, Japan must align with international standards while fostering domestic industries. A key advantage is the issuance of yen-pegged stablecoins, which could streamline international trade and settlement. The table below outlines factors influencing global competitiveness:
| Factor | Japan’s Strength | Challenge |
|---|---|---|
| Regulation | High reliability | Lack of flexibility |
| Currency | Yen stablecoin issuance | Needs broader global adoption |
| Technology | Blockchain development capacity | Private innovation can be restricted |
The challenge for Japan is how to leverage regulatory trust to secure global competitiveness.
Tax Reform Directions for Crypto Assets
Taxation has a major influence on the growth of the crypto market. Under current rules, corporations face unrealized gains taxation on crypto holdings, discouraging adoption. To address this, the 2025–2026 tax reform plan is considering shifting to realized gains taxation, treating crypto more like traditional financial products. Furthermore, reporting requirements for exchanges are expected to be strengthened to ensure transparency. Below is a comparison of the current and proposed tax framework:
| Category | Current System | Proposed Reform |
|---|---|---|
| Unrealized gains tax | Corporations taxed | Shift to realized gains |
| Investor protection | Limited | Aligned with financial products |
| Reporting obligation | Partially voluntary | Mandatory for exchanges |
If implemented, companies will find it easier to hold and utilize crypto, encouraging startups and financial institutions to launch new services.
Building an Ecosystem through Public-Private Collaboration
For crypto to grow sustainably, collaboration between government and private sectors is crucial. The government establishes rules and ensures consumer protection, while private companies develop innovative services within that framework. Universities and research institutions also play a role by applying blockchain and AI technologies in practical ways. For instance, if the FSA provides guidelines for stablecoin issuance, private firms can launch products that enable faster and safer payments. The following table highlights the division of roles:
| Stakeholder | Role | Expected Outcome |
|---|---|---|
| Government/FSA | Legislation, protection | Safety and trust |
| Private companies | Service development | Convenient payment tools |
| Universities/research | Technical R&D | Blockchain and AI adoption |
| International cooperation | Global expansion | Japanese technology adopted worldwide |
Public-private collaboration is the foundation for Japan to build a competitive ecosystem that can expand internationally.
Conclusion
Japan’s crypto asset market has expanded thanks to regulatory frameworks and consumer protection. Moving forward, tax reforms, global competitiveness, and public-private collaboration will be key to sustaining growth. The spread of stablecoins and corporate adoption could position Japan as a global leader in crypto innovation. Crypto assets are no longer just speculative investments—they are becoming tools for payments, remittances, and asset formation. Their continued integration will play a crucial role in supporting Japan’s future economic growth.
