Main Points:
- Introduction of the U.S. Strategic Bitcoin Reserve and prohibition of a CBDC under President Trump’s Executive Order
- Parliamentary proposal by Representative Sohei Kamiya to adopt crypto-enabled monetary tools and tax reforms in Japan
- Japan’s current crypto taxation regime triggers double taxation, as illustrated by an inheritance case
- Financial Services Agency (FSA) aims to shift crypto gains to a separate, flat tax system by mid-2025
- Explosive growth of U.S. spot Bitcoin ETFs, with over $5.25 billion net inflows in January 2025
- Bipartisan U.S. stablecoin framework (GENIUS Act) advances, mandating one-to-one reserves and Treasury backing
- Japan’s crypto adoption exceeds 12 million accounts, presenting both opportunity and regulatory challenges
1. Introduction: U.S. Strategic Bitcoin Reserve & Crypto Policy Shift
In January 2025, President Donald J. Trump issued Executive Order 14178, “Strengthening American Leadership in Digital Financial Technology,” which revoked the Biden administration’s digital asset framework and prohibited any U.S. central bank digital currency (CBDC). Notably, the order established a Strategic Bitcoin Reserve, treating bitcoin as “digital gold” to be held as a reserve asset by the U.S. Treasury. Forfeited bitcoin from criminal proceedings capitalizes the reserve, and no sales are permitted, with future acquisitions to remain budget-neutral and cost-free to taxpayers while banning any CBDC development.
This policy reflects a broader strategy: shrinking the Federal Reserve’s monopoly over monetary tools and creating a presidentially supervised digital-asset infrastructure. Critics argue it risks undermining the Fed’s independence and dollar supremacy; supporters see it as critical for America’s innovation edge.
2. Japan’s Parliamentary Proposal: Embracing Crypto-Enabled Monetary Tools
On June 5, 2025, Representative Sohei Kamiya (Sanseitō) presented a Diet question advocating for Japan to mirror U.S. crypto initiatives, including:
- CBDC ban and promotion of private stablecoins
- Establishment of a Bitcoin Reserve within the Ministry of Finance to diversify national assets
- Review of the government-Bank of Japan relationship, given Japan’s swelling public debt
Kamiya cited the Trump administration’s approach as a model for innovative fiscal tools that leverage crypto’s efficiency while safeguarding privacy and decentralization. He underscored Japan’s rapidly growing crypto user base—over 12 million domestic accounts—as evidence of both public interest and the urgent need for a supportive policy framework.
3. Taxation Challenges: Double Taxation and Reform Proposals
Japan currently classifies crypto gains as miscellaneous income, subject to progressive rates up to 55 percent (including resident tax). Representative Kamiya highlighted a double-taxation scenario: when inherited bitcoin—purchased for ¥5 million—soared to ¥2 billion, combined inheritance and income taxes amounted to ¥2.04 billion, resulting in a ¥40 million shortfall for the heir. This case demonstrates how the existing framework disincentivizes investment and exposes retail holders to crippling tax bills.
In response, the Financial Services Agency (FSA) and Ministry of Finance announced they will complete a review by June 30, 2025, considering:
- Transition to a separate, flat tax rate (e.g., 20 percent) with loss carry-forward
- Introduction of self-reporting under a “withholding tax” model to streamline compliance
- Enhanced investor protections aligned with Securities and Exchange Law, instituting audits and reserves for intermediary custodians
If adopted, these reforms would align Japan with global peers, reducing barriers for institutional and retail participation in crypto markets.
4. Market Developments: Spot Bitcoin ETFs and Institutional Adoption
While Japan debates fiscal and regulatory frameworks, the U.S. market has witnessed explosive institutional adoption via spot Bitcoin ETFs:
- In January 2025, U.S. spot Bitcoin ETFs attracted $5.25 billion in net inflows, led by BlackRock and Fidelity
- BlackRock’s IBIT was the best-performing crypto ETP, accumulating over $37.7 billion in net inflows since launch.
- Options trading on IBIT began in February 2025, offering new hedging tools for sophisticated investors.
- Trump Media’s Truth Social filed to launch its own spot BTC ETF, leveraging political branding to enter an increasingly crowded space.
These products democratize access by enabling investors to purchase Bitcoin exposure through traditional brokerage accounts, bypassing wallets and private keys, and benefiting from regulatory oversight, custodial security, and potential tax efficiencies.
5. Stablecoin Regulation: U.S. Legislative Progress
Stablecoins have become integral to both crypto markets and real-world payments, but lack a unified U.S. regulatory framework. Recent legislative efforts include:
- GENIUS Act (S. 394): Advanced by a 66-32 Senate vote on May 20, 2025, establishing uniform rules for asset-backing, reserves, audits, and law-enforcement compliance.
- The bill mandates 1:1 backing with liquid assets (e.g., U.S. dollars, T-bills), potentially boosting Treasury demand given stablecoin issuers’ $166 billion holdings.
- The House is concurrently debating the STABLE Act, and a separate CLARITY Act seeks to delineate SEC vs. CFTC jurisdiction over digital assets.
These efforts aim to protect consumers, safeguard systemic stability, and affirm U.S. leadership in digital finance. Japan can draw lessons by crafting its own stablecoin framework, ensuring interoperability and minimizing regulatory arbitrage.
6. Japan’s Crypto Ecosystem: Adoption and Opportunities
With 12 million+ accounts, Japan is among the world’s leading retail crypto markets. Key trends:
- DeFi platforms are gaining traction, with yield farming and liquidity pools attracting institutional capital.
- Emerging tokenization of real-world assets (RWAs), such as real estate and corporate debt, leverages blockchain’s transparency and efficiency.
- Government-backed digital identity pilots (e.g., KYC integration with My Number) promise streamlined on-boarding for retail and institutional users.
- The BSP (Philippines) and FSA are collaborating on cross-border payment pilots, signaling regional harmonization in Asia.
By aligning taxation, custody standards, and monetary tools with global best practices—including the U.S. Strategic Bitcoin Reserve model and stablecoin regulations—Japan can accelerate innovation, attract foreign investment, and strengthen financial stability.
7. Conclusion: Toward Balanced Innovation
Representative Kamiya’s proposal spotlights an inflection point for Japan: to harness crypto’s potential in modernizing monetary policy, diversify sovereign reserves, and revise punitive tax structures that hinder participation. The U.S. example—prohibiting a CBDC, promoting stablecoins, and establishing a Bitcoin Reserve—signals a paradigm shift in central-government engagement with digital assets.
Simultaneously, the rapid growth of spot Bitcoin ETFs and stablecoin legislation in the U.S. underscore the institutionalization of crypto markets. Japan must implement clear tax rules—moving to a flat-rate, withholding regime with loss carry-forward—and establish robust custody requirements and investor protections by year-end 2025.
By adopting a balanced approach—fostering innovation while safeguarding stability—Japan can solidify its position as a crypto hub in Asia, providing new revenue streams, efficient payment systems, and a diversified monetary toolkit for the digital era.
