Japan's crypto policy continues to move towards the commercialization of financial products. The ruling Liberal Democratic Party recently submitted a proposal to the Finance Minister advocating for a legal framework for crypto ETF trading, while also supporting the development of yen-denominated stablecoins.

Liberal Democratic Party submits proposal

According to Reuters, the Liberal Democratic Party (LDP) proposed that Japan should establish a trading system for cryptocurrency ETFs. Such products would allow investors to participate in the market in a more easily understandable way, without the need to purchase and hold the underlying crypto assets themselves.

If the relevant regulations are implemented, Japan will join markets such as the United States and Hong Kong as one of the major economies that allow exposure to crypto assets through ETFs.

The draft amendment was approved in April.

In April of this year, the Japanese cabinet approved a draft amendment to classify crypto assets as financial products. Previously, Japan had long preferred to view crypto assets as payment instruments.

This shift indicates that Japanese regulatory thinking is moving from a payment-oriented perspective to an investment product perspective. If legislation continues to progress, the institutional foundation for crypto ETFs will become even clearer.

Japanese yen stablecoins come into policy focus

The report also mentioned that Japan's ruling party supports promoting yen-denominated stablecoins. The current global stablecoin market is worth approximately $315 billion, the majority of which is comprised of tokens pegged to the US dollar.

This situation has already attracted the attention of policymakers outside the United States. For these countries, the continued expansion of dollar-denominated stablecoins could potentially bypass their domestic banking systems and payment networks. Japan's inclusion of yen-denominated stablecoins alongside cryptocurrency ETFs in its discussions indicates that it is simultaneously advancing institutional development on both the investment and payment sides.