Japan’s ruling party pushes crypto ETFs and yen stablecoins

Japan’s Liberal Democratic Party handed Finance Minister Satsuki Katayama a proposal on Sunday. The LDP party asked to build a legal framework for cryptocurrency ETF trading and get yen stablecoin payments across Asia.

The document was sent by the LDP’s blockchain promotion panel. It talks about crypto ETFs as a simple investment instrument, easier to deal with than holding crypto directly. LDP members believe crypto ETFs should be officially accepted in Japanese markets.

Junchi Kanda, a member of the panel, told reporters that the group wants the government to promote yen stablecoins as a payment gateway in Asian markets.

Japan stablecoins to reduce dollar dominance in the country

USDT, USDC, and other dollar-pegged stablecoins account for most of the $315 billion stablecoin market. Policymakers outside the U.S. worry these tokens could route payments around domestic banks, cutting commercial lenders out of cross-border flows.

Bank of Japan Deputy Governor Ryozo Himino said last month that designing the future global monetary system needs a “holistic approach” rather than a binary choice between CBDCs and stablecoins.

Kanda floated the idea of using the Asian Development Bank’s annual meeting (Tokyo hosts in May 2027) as a stage to promote yen stablecoin policies and blockchain initiatives.

Japanese domestic companies and banks work on stablecoins in the country

Startup JPYC launched Japan’s first licensed yen stablecoin in October 2025 and has issued over 1 billion yen (~$6.3 million) in coins since then, Cryptopolitan previously reported. The startup set a target of issuing 1 trillion yen, or $6.6 billion, in three years.

Japan’s three largest banks jumped into the stablecoin race as well. Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group announced a joint stablecoin experiment in late 2025. They ran a proof-of-concept in March 2026, testing both yen-pegged and dollar-pegged coins on the Progmat infrastructure. The Financial Services Agency gave the project “Payment Innovation Project” status.

A fourth initiative, EJPY, got approval in May 2026 from the Japan Blockchain Foundation. That token will use a trust-based (Type III) legal structure that exempts it from the 1 million yen per-transaction cap applied to standard electronic payment instruments. Makes it more useful for corporate settlements.

LDP wants Japan to recognize crypto ETFs

On the ETF front, the Liberal Democratic Party’s proposal would put Japan alongside the United States and Hong Kong. Both countries already allow crypto ETFs as a way for investors to get exposure to digital assets without holding the coins directly.

In April, Japan’s cabinet approved a draft amendment to reclassify cryptocurrency as a financial product. Previously, Japanese law treated crypto only as a payment tool. That reclassification helps the ETF framework in the Asian country.

Katayama hasn’t publicly responded to the proposal yet. The LDP holds a parliamentary majority. However, any legislative changes still need to pass through the standard committee and floor vote process.