Japan's Finance Minister Endorses Crypto as Part of Diversified Portfolios, Signals Regulatory Support

Japan's Finance Minister Katsunobu Kato publicly stated on Monday, August 25, 2025, that cryptocurrencies can be part of a diversified investment portfolio. Speaking at the WebX2025 digital assets forum in Tokyo, Kato acknowledged the risks associated with crypto's high volatility but emphasized that building an appropriate investment environment could mitigate these risks and allow digital assets to serve as legitimate diversification tools.

Minister Kato further revealed that the government is focused on creating a conducive trading environment for crypto assets, ensuring that innovation isn't stifled by excessive regulation. This statement comes against the backdrop of Japan's concerning debt-to-GDP ratio exceeding 200%, which raises fears of financial repression policies that could erode returns on traditional investments like fixed-income and cash holdings.

The event also featured prominent industry leaders including Changpeng 'CZ' Zhao, Justin Sun, Mike Novogratz of Galaxy, and Arthur Hayes of Maelstrom. André Dragosch, European Head of Research at Bitwise, speculated on social media whether Japan's regulatory pivot might lead to a strategic Bitcoin reserve for the nation.

This endorsement follows recent regulatory advancements in Japan, including the Financial Services Agency's approval of the first yen-denominated stablecoin last week, issued by Tokyo-based fintech company JPYC. Additionally, Japan's ruling Liberal Democratic Party has pledged significant crypto reforms, including equities-style insider trading rules for digital assets and potential tax reductions from the current 55% maximum rate to 20%.