Japan’s ruling Liberal Democratic Party has urged the government to legalize crypto ETFs and promote Yen stablecoins across Asia. The proposal was sent to Finance Minister Satsuki Katayama. It marks a wider push to expand Japan’s digital finance role.
According to Reuters, the plan came from the Liberal Democratic Party (LDP) legislative panel. Katayama also oversees the Financial Services Agency, Japan’s main financial regulator. The proposal aims to create greater clarity around stablecoin payments and crypto investment products.
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Yen Stablecoins Proposed for Asia Settlements
The party aims to make Japan a rival to digital asset hubs like Hong Kong and Singapore. It’s geared towards regulated access instead of direct crypto ownership. Crypto ETFs could provide easier access to digital assets, lawmakers said.
Spot Bitcoin and Ethereum ETFs deserve to be formally recognized, the panel said. It said the products would enable retail and institutional investors to step into the market. Investors may be able to enjoy regulated financial products without having to take direct custody risks.
The proposal also included the expansion of yen stablecoins in the Asian settlement systems. LDP lawmaker Junichi Kanda urged the government to encourage their future use in the region. He said the panel urged officials to take steps for settlement adoption.
Japan will also host the annual Asian Development Bank meeting next year. The event may provide an opportunity for Tokyo to showcase its blockchain plans. It can also be seen as an opportunity to showcase Japan’s efforts on Yen stablecoins and digital payments.
The recent proposal comes after the FSA adopted new regulations in May 2026. Those rules paved the way for trust-based foreign stablecoins to enter the Japanese market. They also clarified that qualifying stablecoins would not be considered securities.
Japan Banks Test Stablecoin Payments
Japan’s largest banks have already tested stablecoin systems under regulatory oversight. Three large banks have introduced a joint project supported by the FSA last year. Fintech firm JPYC also began issuing Yen stablecoins for blockchain-based payment use.
The policy move comes amid the dominance of dollar-backed stablecoins in the world. USDT and USDC are still significant tokens in the crypto trading market and cross-border transfers. Regulators have cautioned that such tokens may divert money to banks.
Digital dollarization has also been a concern for central banks. European Central Bank officials stated that dollar stablecoins might increase the U.S. footprint in global finance. The support for Yen stablecoins seems like an effort to alleviate that imbalance.
The LDP plan is tied to a comprehensive payments plan that includes crypto ETFs. It introduces Yen stablecoins as a potential regional settlement solution. The measure also provides another avenue for Japan to continue the growth of crypto investment products.
The measures, if passed, could bolster Tokyo’s role in Asian digital finance. They would also help Japan’s aim of developing a more structured crypto market. For now, Yen stablecoins remain central to that policy direction.
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