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Japan’s Liberal Democratic Party handed Finance Minister Satsuki Katayama a proposal on Sunday. The LDP party asked to build a legal framework for cryptocurrency ETF trading and get yen stablecoin payments across Asia.
The document was sent by the LDP’s blockchain promotion panel. It talks about crypto ETFs as a simple investment instrument, easier to deal with than holding crypto directly. LDP members believe crypto ETFs should be officially accepted in Japanese markets.
Junchi Kanda, a member of the panel, told reporters that the group wants the government to promote yen stablecoins as a payment gateway in Asian markets.
<h3 id="span-japan-stablecoins-to-reduce-dollar-dominance-in-the-country-span">Japan stablecoins to reduce dollar dominance in the country</h3>
USDT, USDC, and other dollar-pegged stablecoins account for most of the $315 billion stablecoin market. Policymakers outside the U.S. worry these tokens could route payments around domestic banks, cutting commercial lenders out of cross-border flows.
Bank of Japan Deputy Governor Ryozo Himino said last month that designing the future global monetary system needs a “holistic approach” rather than a binary choice between CBDCs and <a href="https://www.cryptopolitan.com/ecb-looks-down-on-stablecoins-influence-euro/" rel="noopener noreferrer nofollow">stablecoins</a>.
Kanda floated the idea of using the Asian Development Bank’s annual meeting (Tokyo hosts in May 2027) as a stage to promote yen stablecoin policies and blockchain initiatives.
<h3 id="span-japanese-domestic-companies-and-banks-work-on-stablecoins-in-the-country-span">Japanese domestic companies and banks work on stablecoins in the country</h3>
Startup JPYC launched Japan’s first licensed yen stablecoin in October 2025 and has issued over 1 billion yen (~$6.3 million) in coins since then, <a href="https://www.cryptopolitan.com/japan-stablecoin-issuers-full-rollout/" rel="noopener noreferrer nofollow">Cryptopolitan previously reported</a>. The startup set a target of issuing 1 trillion yen, or $6.6 billion, in three years.
Japan’s three largest banks jumped into the stablecoin race as well. Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group announced a joint stablecoin experiment in late 2025. They ran a proof-of-concept in March 2026, testing both yen-pegged and dollar-pegged coins on the Progmat infrastructure. The Financial Services Agency gave the project “Payment Innovation Project” status.
A fourth initiative, EJPY, got approval in May 2026 from the Japan Blockchain Foundation. That token will use a trust-based (Type III) legal structure that exempts it from the 1 million yen per-transaction cap applied to standard electronic payment instruments. Makes it more useful for corporate settlements.
<h3 id="span-ldp-wants-japan-to-recognize-crypto-etfs-span">LDP wants Japan to recognize crypto ETFs</h3>
On the ETF front, the Liberal Democratic Party’s <a href="https://www.reuters.com/legal/government/japan-must-promote-yen-stablecoins-asia-ruling-party-panel-says-2026-06-01/" rel="noopener noreferrer nofollow">proposal</a> would put Japan alongside the United States and Hong Kong. Both countries already allow crypto ETFs as a way for investors to get exposure to digital assets without holding the coins directly.
In April, Japan’s cabinet approved a draft amendment to reclassify cryptocurrency as a financial product. Previously, Japanese law treated crypto only as a payment tool. That reclassification helps the ETF framework in the Asian country.
Katayama hasn’t publicly responded to the proposal yet. The LDP holds a parliamentary majority. However, any legislative changes still need to pass through the standard committee and floor vote process.
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LDP wants Japan to compete with dollar stablecoins in Asia

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