Japan is speeding up integration between digital assets and traditional finance. In a New Year address at the Tokyo Stock Exchange, Finance Minister Satsuki Katayama said exchanges play a decisive role in widening public access to digital and blockchain-based assets and that the government will spare no support for digital financial innovation, The Block reported on Jan. 5, citing CoinPost.

Katayama, citing the U.S. case, pointed to crypto exchange-traded funds (ETFs) taking hold among investors as a hedge against inflation. She said Japan could also build a similar structure, but Japan currently has no crypto ETFs.

She declared 2026 the “year of digital” and made clear she will actively support the Japan Exchange Group in creating an innovative trading environment based on cutting-edge technology. She said the shift is not limited to the financial industry but will serve as a turning point to resolve structural problems in Japan’s economy such as deflation.

Japan's government has continued efforts since last year to bring digital assets into the regulated system. In October last year, the Financial Services Agency (FSA) discussed allowing banks to treat cryptocurrencies like stocks or Japanese government bonds. In the same month, it approved the first yen-pegged stablecoin, JPYC.

In November, it finalised a plan to reclassify 105 major cryptocurrencies, including bitcoin and ethereum, as existing financial products. That could become a foundation for raising the use of cryptocurrencies within the traditional financial system, The Block reported. Japan's government is also reviewing a plan to cut the cryptocurrency tax rate, currently as high as 55 percent, to 20 percent.