XRP now leads Japan’s cash inflows, and a forthcoming 20% tax rate will secure that edge.

On January 5, Japan’s Finance Minister Satsuki Katayama made a statement at the Tokyo Stock Exchange, proclaiming 2026 as a “digital year” and positioning traditional exchanges as the main access point for investors interested in cryptoassets and products similar to ETFs.

As noted by Elliptic, she highlighted US spot Bitcoin ETFs as a reference point, clearly indicating the direction Japan’s Financial Services Agency has been pursuing: integrating crypto into the same institutional frameworks as equities and funds.

The significance of this announcement lies in the regulatory framework established by it, which includes tax reductions, stablecoin licensing, and a comprehensive reclassification of 105 cryptoassets as financial products, thus creating a transparent regulatory path for institutional crypto engagement in Asia.

Moreover, within the nuances of this transition, there is a secondary effect: XRP is central to Japan’s current crypto ecosystem, positioning it to capture a significant portion of the institutional investments that these reforms aim to facilitate.

Policy Stack

The Financial Services Agency of Japan has completed its plans to reclassify 105 key cryptoassets as “financial products” under the Financial Instruments and Exchange Act, moving them out from the less stringent Payment Services Act framework.

Exchanges that list these assets will be subject to issuer-like disclosure requirements, volatility, blockchain risk reporting, and restrictions on insider trading. This legislation is scheduled for the 2026 ordinary Diet session.

This legislative package also lowers the effective tax rate on qualifying crypto income from as high as 55% to a flat 20%, aligning the taxation of crypto with that of stock investments.

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The FSA has also moved forward with a yen-pegged stablecoin initiative, resulting in Japan’s first licensed JPY stablecoin, JPYC, while investigating possibilities for local banks to trade cryptocurrencies similarly to how they handle stocks and government bonds.

When combined, the revisions to the policy framework are outlined in the table below:

Policy area	Policy change	What it does in practice	Implication for crypto markets	Timeline / status
Asset classification	Reclassifies 105 major cryptoassets as “financial products” under the Financial Instruments and Exchange Act (FIEA), instead of the lighter Payment Services Act regime	Integrates targeted tokens into the same legal category as traditional securities, activating issuer-style disclosure, volatility and blockchain-risk reporting, and insider-trading regulations for exchanges that list them	Aligns major tokens within the established securities-market framework, facilitating brokers, exchanges, and institutions to treat prominent coins as mainstream investable assets	Bill scheduled for submission to the 2026 ordinary Diet session
Exchange and issuer obligations	Imposes disclosure and risk-reporting responsibilities on exchanges listing the reclassified assets	Mandates comprehensive information on technology, market and governance risks, alongside monitoring for abusive trading practices	Enhances transparency and investor protection, providing institutional compliance teams with greater assurance regarding the listing and holding of large-cap cryptoassets	Effective upon the passing and implementation of the 2026 FIEA amendment
Tax treatment	Reduces the effective tax on eligible crypto income from up to 55% to a flat 20%, in line with equity taxation	Aligns crypto capital gains with stock investments rather than placing them in high progressive income brackets	Decreases barriers for households, high-net-worth individuals, and corporations to hold and trade crypto, making exchange-listed or fund-wrapped exposure more appealing on a risk-adjusted, after-tax basis	Included in the same reform package; intended to take effect concurrently or shortly after the legal reclassification
Stablecoin regime	Advances a yen-pegged stablecoin framework that led to Japan’s first licensed JPY stablecoin, JPYC	Establishes a regulated framework for issuing and utilizing JPY-backed stablecoins within the domestic market	Creates native JPY liquidity channels for trading and settlement, facilitating onshore stablecoin pairs and the integration of crypto into payment and capital-market systems	Framework already in progress, with JPYC operational as the first licensed JPY stablecoin
Bank and securities participation	Examines methods for local banks to trade cryptocurrencies similarly to stocks and government bonds	Opens opportunities for banks and their securities divisions to directly offer crypto trading, custody, and related services	Expands the range of regulated entities that can intermediate crypto exposure, fostering deeper liquidity and more advanced products and institutional investments	Continuing supervisory efforts related to the broader 2026 reform and bank-level licensing decisions
Political and regulatory framing	Frames digital assets within the securities-market context, with stock and commodity exchanges as primary access points for investors	Indicates that crypto will primarily be accessed through regulated exchanges and securities-like products such as ETFs and structured notes	Establishes a long-term vision anchored in traditional market infrastructure, clearing the way for exchange-listed crypto products, bank custody, and broker-distributed exposure that can enhance institutional participation	Outlined in recent government and ministry communications; provides the narrative and policy trajectory that the 2026 legal and tax reforms aim to operationalize

Adoption Gap

According to Chainalysis’ 2025 Global Crypto Adoption Index, Japan ranks 19th globally for overall crypto adoption. However, in the sub-index for “institutional centralized service value received,” Japan drops to 27th.

While Japanese consumers and high-net-worth individuals are engaged, the flow of funds amounting to $1 million or more through centralized platforms is lagging behind grassroots activities.

Japan’s on-chain value received surged by 120% in the year leading up to June 2025, surpassing growth rates in India (99%), South Korea (100%), Indonesia (103%), and Vietnam (55%). Chainalysis attributes this growth to regulatory reforms, tax initiatives, and stablecoin licensing.

Japan’s on-chain value received grew 120% year-over-year, outpacing Indonesia, South Korea, India, and Vietnam, according to Chainalysis data.

A key detail: from July 2024 to June 2025, purchases of JPY on centralized exchanges predominantly went towards XRP, with approximately $21.7 billion in XRP acquired, in contrast to about $4.7 billion in BTC and $2 billion in ADA.

The report clearly indicates that investors are betting on the “real-world utility of XRP” due to Ripple’s strategic partnership with SBI Holdings.

The Japanese crypto sector is expanding rapidly, retail participation outpaces institutions, and XRP leads in JPY on-ramp volume.

Why XRP Captures the Institutional Pathway

The payments infrastructure is not merely theoretical. SBI Remit, a subsidiary of SBI Holdings, has incorporated Ripple’s payment technology since 2017. In 2021, it became the first Japanese remittance provider to utilize XRP as a bridge asset for transfers between Japan and the Philippines.

In 2023, SBI expanded this model, allowing XRP to bridge remittances from Japan to bank accounts in the Philippines, Vietnam, and Indonesia.

These are not pilot initiatives, but fully operational corridors facilitating money transfers across the region’s busiest remittance routes.

On the stablecoin front, Ripple and SBI entered into a memorandum of understanding in August 2025 for SBI VC Trade to distribute Ripple’s RLUSD stablecoin domestically. This SBI-affiliated firm is the first to acquire Japan’s Electronic Payment Instruments Exchange Service Provider license.

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This collaboration targets institutional demand and emphasizes full US dollar backing, short-term Treasuries, and monthly audits to fulfill regulatory requirements.

The ETF aspect is particularly relevant to this discussion.

In August 2025, SBI’s earnings reports outlined plans for Japan’s inaugural dual-asset crypto ETF, combining Bitcoin and XRP. SBI intends to launch this product “upon regulatory approval,” anticipating the FSA’s reclassification of crypto as a financial product.

The Bitcoin-XRP ETF would be listed on the Tokyo Stock Exchange, with XRP sharing top billing alongside Bitcoin in the design of institutional products.

Recent studies depict Japan as one of the most “Ripple-friendly” jurisdictions, with SBI Remit’s XRP corridors highlighted as examples of cost-effective, near-instant transfers and as a testing ground for cross-border payment infrastructure in Asia.

When Tokyo regulators discuss “real-world utility” or “digital year” in conjunction with capital markets, XRP stands out as one of the few assets already integrated into regulated institutions and payment systems.

Japan is the 5th-largest country in APAC for crypto adoption, with nearly $200 billion in on-chain value received, trailing only Australia and Pakistan, according to Chainalysis.

How Exposure Actually Reaches Investors

Once the FSA’s proposals are enacted, those 105 cryptoassets will be governed by FIEA, with requirements for disclosure, insider-trading controls, and product-governance regulations similar to those for equities and funds.

This unlocks the existing machinery of Japanese finance: securities firms, banks’ securities divisions, and exchange-listed products.

The Osaka Digital Exchange currently operates START, Japan’s first secondary market for security tokens, which is supported by institutions such as SBI and prominent brokerages.

Policy initiatives from Nomura Research Institute outline the potential offerings: investment trusts holding spot crypto, futures-based crypto funds, the sale of foreign Bitcoin ETFs to domestic investors, and possible cross-listings of US products on the Tokyo Stock Exchange.

Japan’s current regulatory framework allows for foreign crypto ETF purchases but limits domestic creation and cross-listing of spot crypto products.

Combine SBI’s plans for a Bitcoin-XRP ETF, SBI VC Trade’s role as a licensed crypto and stablecoin platform, and SBI Remit’s existing XRP infrastructure.

The institutional pathway becomes evident: JPY savings and corporate funds can be converted into regulated exposure to XRP through exchange-listed ETFs, investment trusts, or structured notes utilizing XRP liquidity on domestic exchanges.

What “More XRP Liquidity” Actually Looks Like

On a microstructure level, the most immediate effect is observable in JPY spot markets.

Tax reductions and the transition to the securities law framework facilitate brokers and wealth managers in recommending regulated crypto products.

For XRP, which already dominates the JPY fiat on-ramp volume, this likely results in an increase in daily JPY/XRP trading volume, deeper order books, and tighter spreads compared to USD pairs.

Chainalysis’ figure of $21.7 billion for XRP/JPY inflows offers a baseline for comparison.

XRP accounted for $21.7 billion in JPY purchases on centralized exchanges, vastly surpassing BTC’s $4.7 billion, according to Chainalysis data.

On the payments front, if Remit and its partners continue to expand corridors and if yen-backed stablecoins like JPYC or bank-issued tokens become standard settlement assets, XRP’s role as a bridge currency for regional remittances will be reinforced. This will create a sustained two-way flow and liquidity during Asian trading hours.

The ETF and securities-wrapper layer represents a critical inflection point for institutional engagement.

If the Bitcoin-XRP ETF or a comparable product receives approval, XRP could attract interest from pension funds, asset managers, and corporate treasuries that can only invest through FIEA-compliant vehicles.

In practice, this would manifest as growth in ETF assets under management, creation and redemption activities linked to XRP, and an increased share of global XRP trading volume channeled through JPY-venue authorized participants.

Upside Without the Oversell

Japan is rapidly evolving into a significant crypto market. Policies are shifting to classify major tokens as full financial products, accompanied by reduced tax rates.

Regulators aim for exchanges and ETFs to act as the primary access points. XRP is uniquely positioned in Japan due to its dominance in JPY on-ramps, SBI/Ripple’s remittance infrastructure, and proposed ETFs.

It is essential to consider the caveats: no crypto ETFs have been approved yet, the FSA hasn’t publicly designated XRP as a favored asset, and the liberalization of stablecoins could dilute some of XRP’s structural advantages in JPY flows as USDC and JPYC gain wider acceptance.

However, if Japan’s “digital year” propels regulated exchanges and ETF structures to the forefront of crypto access, XRP stands out as one of the few non-Bitcoin assets that already aligns with domestic policy and has tangible transactional utility both in Japan and across Asian remittance corridors.

The institutional gap identified by Chainalysis, ranking 27th in institutional flows despite being 19th in overall adoption, highlights the area these reforms are intended to address.

As that gap narrows, the assets that are already integrated into Japan’s regulated financial infrastructure, that facilitate actual monetary transactions across the region’s payment systems, and that are included in proposed ETF frameworks will have a structural advantage. XRP meets that criterion in ways that most tokens do not.

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