Japan Embraces Stablecoins Amid Global Digital Currency Race, Targets 20% Crypto Tax Rate

Osaka, Japan – A pivotal discussion at the Web Fintech Expo in Osaka highlighted Japan's proactive stance on stablecoins, with a focus on their potential to revolutionize finance and the nation's ambitious plans to reduce cryptocurrency tax rates. The dialogue featured Satsuki Katayama, a prominent member of Japan's House of Councillors and Chairperson of the Liberal Democratic Party's Financial Investigation Committee, alongside the Japan Crypto Asset Association and JPYC, Japan's first yen-pegged stablecoin issuer.

The Financial Services Agency (FSA) recently approved JPYC, marking a significant milestone for Japan's digital finance landscape. JPYC aims to issue up to 1 trillion yen (approximately $6.78 billion) worth of its stablecoin within three years, backed by highly liquid assets such as bank deposits and Japanese government bonds. This move positions Japan as a leader in regulated stablecoin development, building on its comprehensive stablecoin framework established in 2023.

Satsuki Katayama emphasized the government's push to reclassify crypto assets, including stablecoins, under the Financial Instruments and Exchange Act. This reform seeks to lower the tax rate on crypto gains from the current 55% (classified as miscellaneous income) to a flat 20%, aligning it with stock trading and U.S. standards. "This reform is expected to be implemented within one to two years," Katayama stated, adding that it aims to encourage broader adoption and investment in the digital asset space.

The discussion also touched upon the contrasting approaches of the U.S. and China in the digital currency sphere. The Trump administration, as evidenced by the "Strengthening American Leadership in Digital Financial Technology" executive order signed in January 2025, has explicitly prohibited the establishment of a U.S. Central Bank Digital Currency (CBDC), instead promoting dollar-backed stablecoins to maintain dollar hegemony. This policy aims to leverage private-sector innovation to reinforce the dollar's global dominance in the crypto sphere.

Meanwhile, reports indicate that the Chinese government is moving towards recognizing yuan stablecoins, a development that could further intensify the global digital currency race. China's digital yuan (e-CNY) pilot program has seen significant expansion, with transaction volumes reaching 7 trillion e-CNY ($986 billion) by June 2024. This strategic push aims to internationalize the yuan and potentially reduce reliance on the U.S. dollar in global transactions.

Panelists at the Web Fintech Expo underscored the broad use cases for stablecoins, from efficient cross-border payments to enhanced liquidity in digital asset trading. While Japan's current stablecoin regulations include a transaction limit of 1 million JPY (approximately $7,000-$10,000 USD), a remnant from earlier payment service laws, there is an acknowledgment that this limit may need adjustment to facilitate larger business-to-business (B2B) transactions. The ongoing dialogue and regulatory advancements signal a concerted effort by Japan to foster a robust and globally competitive digital asset ecosystem.