Main Points :
- Sanae Takaichi’s election as LDP leader (and likely next prime minister) is seen as a boost to risk assets, including cryptocurrency.
- Japanese equity markets have surged, and the yen has weakened sharply, fueling crypto sentiment.
- Underlying regulatory reform is underway: moving crypto under securities law (FIEA), new licenses under Payment Services Act, stablecoin regulation, and tax reform.
- The political shift could accelerate institutional adoption and regulatory clarity for digital assets in Japan.
- However, risks remain: tax burdens, coalition dynamics, macroeconomic constraints, and global pressures.
1. Political Shift: Takaichi’s Victory and Its Market Impact
The surprise election of Sanae Takaichi as leader of Japan’s ruling Liberal Democratic Party (LDP) has drawn attention not just in the political domain but across financial markets. She is poised to become Japan’s first female prime minister on or around October 15, 2025, having secured the party leadership on October 4.
Her ascendancy has been received enthusiastically by markets. On the trading day following her victory, the Nikkei 225 index soared approximately 4.75 %, closing at a record high (¥47,734.04) in yen terms. Simultaneously, the yen weakened sharply, breaching ¥150 per dollar, as investors anticipated a more dovish or reflationary policy mix.
Observers have begun calling this the “Takaichi trade” — a positioning toward risk assets, yen depreciation, and higher inflation expectations.
From a macro view, the result is clear: markets are pricing in large fiscal stimulus, accommodative monetary policy, and potential easing of regulatory constraints on growth sectors.
2. Takaichi’s Economic and Policy Orientation
Takaichi is widely understood to be a pro-growth, fiscal activism politician. Her platform emphasizes tax cuts, strategic public investment especially in “crisis management” sectors (such as AI, semiconductors, biotech, defense), and continuation or revival of “Abenomics”-style stimulus.
In particular, she has proposed that the government adopt a “crisis management investment” framework, in which the state proactively supports critical infrastructure and strategic industries to guard against economic shocks.
She also speaks of balancing expansion with fiscal discipline — stating that debt-to-GDP levels must be monitored and stabilised.
These stances suggest a tilt toward expansionary fiscal policy, which tends to encourage risk-taking and could favor higher allocations to digital assets in portfolios.
3. Existing and Emerging Crypto Regulation in Japan
To fully appreciate the potential impact of Takaichi’s leadership on crypto, one must understand Japan’s evolving regulatory architecture.
3.1 Reclassification Under Securities Law
One of the most consequential reforms under consideration is the proposal to shift qualifying cryptocurrencies from the Payment Services Act (PSA) to the Financial Instruments and Exchange Act (FIEA) — effectively treating them as financial products or securities.
This reclassification would bring crypto under the same regulatory regime as equities and bonds, enabling oversight of insider trading, disclosure requirements, and anti-market-manipulation rules.
By aligning with securities law, the path could also open for crypto ETFs, improved institutional custodianship, and greater investor protection.
However, this shift also implies stricter compliance burdens and oversight — corporations dealing in crypto may need to adhere to extensive disclosure, licensing, and reporting requirements.
3.2 Licenses, Intermediaries, and Asset Retention
In March 2025, the FSA proposed an Amendment Act to the PSA, introducing new licensing rules specifically tailored to businesses acting purely as intermediaries between crypto exchanges or stablecoin providers.
Additionally, the bill would empower authorities to require that exchanges retain assets within Japan, to ensure that domestic users can recover assets even in cases of cross-border insolvency or failure.
These changes aim to strengthen consumer protection and reduce systemic risk in the crypto system.
3.3 AML, Travel Rule, and KYC Enhancements
Japan already enforces a version of the “Travel Rule”: crypto exchanges must share identifying information about senders and recipients when facilitating transfers.
New changes being discussed would further tighten anti–money laundering (AML) and Know Your Customer (KYC) criteria, especially as digital assets increase in scale and complexity.
3.4 Stablecoin & Token Classification
Japan already regulates certain types of stablecoins. Under its 2022 regulatory framework, fiat-backed stablecoins (aka “digital-money type stablecoins”) must register with the FSA.
In August 2025, the fintech firm JPYC obtained approval to launch a yen-pegged stablecoin (JPYC) backed by Japanese government bonds.
In the broader token realm, one key issue remains: which token types qualify for reclassification as “financial products” under FIEA, and which remain under PSA or regulatory exclusion. The boundaries between utility tokens, securities tokens, and payment tokens are being actively debated.
3.5 Taxation Reform
Japan’s current framework taxes crypto gains heavily — often as “miscellaneous income” at rates that can reach ~55%.
Under the proposed changes tied to FIEA reclassification, gains from crypto might be taxed more like equities (e.g. flat 20%).
Experts suggest Takaichi’s leadership could accelerate support for such reform, or at least reduce political friction around tax changes.
However, gaps remain — for example, the issue of loss carryforwards, treatment of stablecoin interest, token swaps, and foreign-exchange accounting.
4. How the Market Is Reacting: Crypto & Risk Assets
4.1 Crypto Sentiment in Japan
Following Takaichi’s election, Bitcoin has reached record highs denominated in Japanese yen — not necessarily in USD terms (since the yen is weak).
Charles d’Haussy, CEO of the dYdX Foundation, remarked that Takaichi’s election has already boosted crypto sentiment among Japanese investors, partly through expectations of looser monetary policy and clearer regulation.
In short: domestic demand for crypto is rising, but some of that is FX-driven, not necessarily a pure demand for BTC in USD terms.
4.2 Institutional & ETF Prospects
If crypto becomes officially treated as a financial product under FIEA, it paves the way for crypto ETFs in Japan, which institutional investors favor.
However, Japan has been cautious in this area. Despite global momentum (e.g. U.S. approving spot Bitcoin ETFs), Japan’s Ministry of Finance and financial bureaucrats have historically been skeptical about digital assets.
Approval of Japanese crypto ETFs would require political will and regulatory overhaul, which Takaichi’s government could potentially deliver more easily than previous administrations.
4.3 Global and Macro Tailwinds
Globally, factors such as elevated inflation, monetary policy uncertainty, and geopolitical concerns may drive capital flow toward digital assets as alternatives or hedges. The current momentum in Japan may amplify those effects.
Japan’s yen weakness further magnifies returns for crypto bought in yen and converted to USD-equivalent gains — at least in domestic narratives.
Moreover, investors’ anticipation of broader fiscal stimulus (higher bond issuance, inflation expectations) may push some capital into risk assets generally, including equities, crypto, and commodities.
5. Opportunities and Risks for Crypto Seekers & Builders
From the standpoint of someone seeking new crypto projects, yield sources, or blockchain real-world applications, here’s how the evolving Japanese landscape might affect strategy:
Opportunities
- Regulatory clarity: The shift to FIEA might eliminate ambiguity around token categorisation, helping projects structure themselves with confidence.
- Institutional access: If ETFs become permissible, capital inflows from institutional investors could expand dramatically.
- Stablecoin innovation: With domestic approval of JPYC, yen-based stablecoins and even digital yen (or central bank digital currency) experiments may see acceleration.
- Blockchain infrastructure demand: Government-backed “crisis investment” may include funding for blockchain infrastructure, Web3 startups, and applied use cases.
- Domestic adoption jump: A more investor-friendly environment may push more Japanese retail and corporate actors into crypto.
Risks & Constraints
- Heavy taxation: Until tax reforms are enacted and clearly defined, high tax rates on crypto gains may discourage activity.
- Regulatory burden and compliance cost: Treating tokens as financial products carries reporting, audit, and disclosure costs that may disproportionately burden smaller projects.
- Political risks: Takaichi must maintain coalition support (especially with Komeito) and navigate conservative elements in bureaucracy.
- Macro constraints: Elevated debt levels, inflation, or external shocks could limit the government’s ability to fund stimulus.
- Global regulatory and de-risking pressures: International jurisdictions may impose controls or constraints on flows in/out of Japan, especially with cross-border linkage.
6. Summation & Strategic Outlook
Sanae Takaichi’s ascent as Japan’s de facto next prime minister has catalyzed a wave of optimism across markets, particularly in the crypto space. The combination of fiscal ambition, anticipated monetary stimulus, and regulatory reform could meaningfully shift Japan’s ecosystem.
For builders and investors, the next 12–24 months in Japan may represent one of the most dynamic windows globally. The reclassification of crypto under securities law (FIEA) would be a structural pivot. If complemented by tax reform and stablecoin policy, Japan could become a global testbed for regulated but friendly crypto innovation.
However, the path is not deterministic. Success hinges on legal design, coalition politics, macro stability, and international regulatory alignment. Projects that bridge utility, compliance, and real-world applicability will be best positioned.
In short: those with patience, on-chain rigor, and regulatory sensibility may find Japan under Takaichi not just a market to watch, but a place to build.
