The ruling party in Japan has proposed establishing a cryptocurrency ETF trading framework and promoting the development of a Japanese Yen stablecoin.

June 1 — According to a Reuters report, the blockchain promotion team of Japan’s ruling Liberal Democratic Party (LDP) has submitted a policy proposal to Finance Minister Taro Aso, pushing for a dedicated legal framework for cryptocurrency exchange-traded funds (ETFs) and advocating for wider adoption of yen-backed stablecoins. The proposal notes that crypto ETFs would give investors a more accessible channel to gain exposure to the digital asset market, without requiring them to directly purchase and custody cryptocurrencies. This April, Japan’s cabinet approved a draft bill amendment to reclassify cryptocurrency from its current status as a payment instrument to a financial product — a move that paves the way for future regulatory framework adjustments. Should the relevant policies be implemented, Japan will join major markets including the U.S. and Hong Kong, allowing investors to participate in the crypto market through ETFs. Separately, Japan’s government and industry groups are actively advancing the development of a yen-backed stablecoin. Stablecoins, which are typically pegged to traditional financial assets like fiat currencies, have a global market size of roughly $315 billion, with USD-backed stablecoins currently dominating this space. Policymakers in non-U.S. countries are concerned that widespread use of USD-backed stablecoins could erode the influence of their domestic banking and payment systems, leading many to explore the path of developing their own domestic currency-backed stablecoins.