Japan ruling party panel urges yen stablecoin push and crypto ETF framework

A panel from Japan’s ruling Liberal Democratic Party has submitted a formal proposal to the government, urging the promotion of yen-based stablecoins for settlement across Asia and the establishment of a legal framework for crypto exchange-traded funds. The submission was presented to Finance Minister Satsuki Katayama, who also oversees the Financial Services Agency, marking a significant push by the ruling party to integrate digital assets into the national financial strategy.

The proposal calls on the government to position crypto-ETFs as an official means of investment within the financial market. According to the document, these products would provide investors with "easy-to-understand ways of investment," allowing exposure to cryptocurrencies without the need to directly own or manage the underlying digital assets. This move aims to formalise the sector and provide clearer regulatory pathways for institutional and retail participation.

Junichi Kanda, a lawmaker on the panel, told reporters that Japan should leverage its role as host of the Asian Development Bank’s annual meeting in May next year to advance blockchain innovation and stablecoin usage. "We urged the government to take steps to promote yen stablecoins for settlement in Asia in the future," Kanda said, highlighting the strategic timing of the proposal to coincide with a major regional financial event.

The initiative aligns with broader efforts by the Financial Services Agency to encourage domestic financial institutions to utilise blockchain technology for operational innovation. Japan’s three largest banks have already announced an FSA-backed project to experiment with jointly issuing stablecoins. Additionally, domestic startup JPYC began issuing yen-pegged stablecoins in October, a notable development in a market where consumers have traditionally preferred conventional payment methods.

While dollar-pegged stablecoins have seen increased adoption globally, partly attributed to strong backing from US President Donald Trump, Japanese policymakers remain cautious. Bank of Japan Deputy Governor Ryozo Himino previously called for a "holistic approach" to the global monetary system, warning against confining options solely to central bank digital currencies or stablecoins. Policymakers have also noted concerns that stablecoins could facilitate the movement of funds outside regulated banking systems, potentially undermining the role of commercial banks in global payment flows.