Japan's Ministry of Finance announced the budget plan for fiscal year 2026, reaching a record high of 122.3 trillion yen. At the same time, financial regulators are also pushing forward comprehensive reforms in the crypto asset framework. The combined effect of these two initiatives is bringing both opportunities and challenges to the crypto market.

The stablecoin testing is the most watched highlight. Yen stablecoin projects led by the three major banks—Mizuho Bank, Mitsubishi UFJ, and others—have entered the pilot testing phase, covering payment scenarios for 300,000 businesses. Once the testing is successfully implemented, this channel will directly connect crypto assets with traditional industry settlements, providing real commercial support for compliant on-chain applications. The new budget's emphasis on technological innovation investment coincides with the Financial Services Agency's payment innovation plans. Meanwhile, the government has also allocated R&D space for blockchain risk prevention and control technologies in crisis response investments.

However, the risks behind expansionary fiscal policies cannot be ignored. Japan's government debt ratio has already exceeded 260%, and concerns over debt sustainability caused by large-scale financing could further boost the yen's depreciation expectations, negatively impacting the attractiveness of yen-denominated crypto assets.

Regulatory adjustments are also worth closer observation. Starting from fiscal year 2026, crypto assets will be upgraded to financial commodities and included under the unified regulatory framework of the Financial Instruments and Exchange Act. There are also significant reforms in the tax system— a fixed 20% tax rate will replace the previous progressive tax system with a maximum of 55%. This change, on one hand, reduces the tax burden for institutional investors and helps attract traditional financial institutions; on the other hand, regulations on crypto lending, initial coin offerings, and other activities are tightening, requiring platforms to meet strict standards such as asset segregation and cold wallet custody.

In the near term, the promotion of yen stablecoin pilots and tax system optimization are likely to attract new capital inflows. However, the uncertainty of yen fluctuations and the policy gap before the release of detailed regulations may increase market volatility in the short term.

Looking at a longer cycle, Japan is adopting a dual-track strategy of sandbox innovation and clear regulation. This approach is setting a reference model for the standardized development of the global crypto industry.