Can Japan strike a balance between tax cuts and yen defense?

Yesterday, Sanae Takaichi was elected as the 104th Prime Minister, and a new Cabinet was inaugurated.

In addition to the new coalition with the Nippon Ishin no Kai, the appointment of key ministers including Satsuki Katayama (Finance) and Hisashi Matsumoto (Digital) will have a major impact on the trajectory of the “2026 tax reform'' sought by the virtual currency industry.

International optimism frames domestic tax showdown

The international crypto community is already expressing optimism about the pace of Japan's financial reforms. Bitunix exchange echoed this sentiment and commented on the new administration.

“Japan’s Financial Services Agency has given the green light for banks to hold BTC. The new Sanae Takaichi administration sets the stage for major financial reforms. Could this be Asia’s next crypto boom?”

As the movement to cut taxes gains momentum under the Meiji Restoration coalition, the new government must decide how to balance promoting industry's desire for an “internationally competitive tax system'' with the critical need to “protect the Japanese yen.''

Core Battlefields: Tax Reform and Key Tensions

The most important issue for the Japanese virtual currency industry is the tax reform in 2026. The Financial Services Authority (FSA) has formally submitted a brief detailing industry demands.

The Financial Services Agency is calling for a review of the current virtual currency income tax system. This system is currently subject to comprehensive taxation (up to 55%). The Financial Services Agency wants to revise the tax to a separate tax (a flat rate of 20%) similar to stock and foreign exchange transactions. The Financial Services Agency also called for tax reform that would allow the creation of crypto-asset exchange-traded funds (ETFs).

The key tension now is between the two characters. One person is Digital Minister Matsumoto, who will inherit the Web3 promotion roadmap. The other is Finance Minister Satsuki Katayama, who prioritizes traditional fiscal discipline. Minister Katayama's appointment suggests optimism about accelerating regulatory reform.

The center of discussion is how the new Ministry of Finance will approach separate taxation. This fundamental issue will be the central theme of next year's tax reform. The influence of the Meiji Restoration and the promotion of local finances.

Elements of the Meiji Restoration: Acceleration of regional finance and regulation

The Takauchi Cabinet cannot ignore the political intentions of its coalition partner, Ishin. The policy agenda of Ishin representative Hirofumi Yoshimura will now be incorporated into the ruling party's framework. This situation has made his influence a key factor in determining the direction of the cryptocurrency industry.

Mr. Yoshimura is a passionate supporter of next-generation finance and maintains a close relationship with SBI Holdings Chairman Yoshitaka Kitao. Mr. Yoshimura has focused on revitalizing regional finance using security tokens (ST) and stable coins.

Incorporating Meiji Restoration policies into national politics will accelerate efforts toward regulated Web3. This puts tokenization (RWA and ST) at the core of the national strategy. The infrastructure for ST secondary transactions is likely to be strengthened. This infrastructure is centered around SBI-led Progmat and Osaka Digital Exchange (ODX).

It functions as a “regional financial infrastructure” model. The Web3 industry has two expectations: a continuation of the Taira Roadmap and increased momentum from the Ishin-SBI axis. It is predicted that deregulation related to ST and stablecoins will be prioritized.

Finance Minister and Economic Security: Defense of the Yen

An important power relationship in the new administration is the collaboration between Finance Minister Satsuki Katayama and Minister of Economy and Security Kimi Onoda in overseeing the Web3 sector.

Minister Katayama has expressed strong views on preventing the outflow of national wealth. It specifically targets foreign capital entering key sectors and sensitive technology areas. Her approach to virtual currency regulation will therefore focus on “tax revenue” and “defending the Japanese yen” against undue foreign financial influence.

Similarly, Minister Onoda will strategically oversee economic security and ensure the independence of digital infrastructure. The Takauchi Cabinet clearly prioritizes crypto assets in its economic security agenda. The organization therefore sees Web3 as both a tool for innovation and a potential risk to financial crime and erosion of national wealth. This strategic alignment suggests an increased focus. The aim is to establish a “yen-based digital economic zone.'' It prioritizes global security standards and the protection of Japan's assets.

The post Welcome the new cabinet: Can Japan balance tax cuts and yen defense? The post appeared first on BeInCrypto.