Japan Is Going All In On Crypto

Removing the Tax Burden on Corporate Digital Asset Holdings

Japanese authorities are introducing legislation to remove tax barriers to using yen-denominated stablecoins in international transactions. The central aim is to eliminate the so-called "unrealized gains" tax on companies' digital asset holdings, allowing firms to hold digital yen for settlement purposes without incurring year-end tax costs from price volatility.

That corporate exemption on unrealized gains took effect on April 1, 2026, marking a concrete first step in what Tokyo is framing as a broader overhaul of its digital asset framework. Starting in the fiscal year beginning April 1, 2026, Japanese companies no longer owe tax on the mark-to-market value of long-term crypto holdings at year-end. Analysts have noted that this change alone is expected to slow the exodus of crypto businesses to jurisdictions like Dubai and Singapore.

A group of lawmakers within Japan's Liberal Democratic Party is seeking changes to the country's cryptocurrency tax system and stronger support for yen-denominated stablecoins, as Japan looks to keep pace with global digital asset rules. The party's Parliamentary Association for the Promotion of Blockchain delivered recommendations to Finance Minister Satsuki Katayama, covering stablecoins, exchange-traded funds, central bank digital currencies, and wider applications for blockchain technology.

Yen Stablecoins and the Push for Cross-Border Settlement

The stablecoin push is gaining real momentum. Japan's three megabanks, MUFG, Sumitomo Mitsui, and Mizuho, plan to jointly issue a yen stablecoin for live commercial transactions during fiscal 2026, built on the Progmat ledger platform and structured through a trust, with a dollar version to follow. The plan extends an FSA-supervised pilot that began in November 2025.

A yen-denominated stablecoin market could support cross-border settlement, tokenized securities, and regional payment flows. On the regulatory side, the Financial Services Agency proposed tax reform measures for fiscal year 2027 that would exempt trustees from mandatory reporting every time a stablecoin changes hands, removing what has quietly become one of the biggest friction points in the country's digital payments infrastructure.

The wider reform package is also ambitious. Japan is advancing a crypto reform bill that would classify digital assets as financial products and cut taxes on eligible crypto gains to 20%. The proposal would introduce stricter disclosure requirements, enhanced exchange oversight, and insider trading rules while paving the way for crypto ETFs. However, the timeline is not immediate. The tax change is slated for 2028 for individual traders, subject to final passage, because it depends on the reclassification amendments passing first.

Japan's crypto policy debate is shifting from defensive regulation to market structure reform. Whether the legislation moves fast enough to satisfy the industry remains an open question, but the direction is clear.

Sources:
FinanceFeeds: Japan Lawmakers Push Crypto Tax Reform and Yen Stablecoin Support
Yahoo Finance: Japan Advances Crypto Bill to Reclassify Digital Assets and Cut Taxes to 20%
Crypto Briefing: Japan FSA Seeks to Revise Stablecoin Tax Rule