TOKYO — For the third consecutive year, Japan's sitting prime minister addressed the country's largest blockchain conference, and this time the message came with a more detailed policy stack behind it than the previous two. Prime Minister Sanae Takaichi delivered a video address at WebX 2026 on Monday at The Prince Park Tower Tokyo, reaffirming that her government will expand state-backed financial support to Web3 startups as part of Japan's Comprehensive Startup Support Package www.techtimes.com .

The two-day conference, organized by CoinPost, drew an expected 15,000 participants, making it one of Asia's largest gatherings of blockchain innovators, institutional investors, and government officials. Economy, Trade and Industry Minister Ryosei Akazawa was also confirmed to address the event www.techtimes.com .

JPYC Stablecoin: Japan's Digital Yen Pioneer

That regulatory framework produced a pioneering first: JPYC, Japan's first licensed yen-pegged stablecoin. JPYC Inc. received its funds-transfer service provider license in August 2025, enabling one-to-one redemption with Japanese yen www.techtimes.com .

Commercial operations launched in October 2025 on Ethereum, Avalanche, and Polygon. JPYC has set an ambitious target of 10 trillion yen in circulation within three years—a scale that would rival some central bank digital currency pilots www.techtimes.com .

Its revenue model depends on interest earned on short-term Japanese government bonds held as reserves, a structure that the Bank of Japan's recent rate hikes have made viable for the first time www.techtimes.com .

Industry Criticism and Timeline Concerns

The Japan Virtual and Crypto Assets Exchange Association has publicly criticized this timeline as too slow www.techtimes.com . A Web3 protocol developer or DeFi trader based in Tokyo does not benefit from the reform at all unless they exclusively use FSA-licensed domestic exchanges for eligible asset types www.techtimes.com .

This creates a bifurcated system where the comprehensive tax benefits apply only to a narrow "green zone" of activities, leaving the broader Web3 ecosystem subject to the previous punitive tax regime.

Investor Demand and XRP Dominance

The investor demand that would flow into those instruments, however, is documented. Between July 2024 and June 2025, Japanese investors put approximately $21.7 billion into XRP alone through centralized exchanges—more than four times what flowed into Bitcoin over the same period—under the current 55% tax regime www.techtimes.com .

SBI Holdings, which holds roughly 9% of Ripple as its largest external shareholder and runs Japan's only live XRP remittance corridor, began distributing Ripple's dollar-backed stablecoin RLUSD in Japan on March 31, 2026—the first Asian market to do so www.techtimes.com .

What Comes Next?

As Japan continues to lead the G7 in crypto regulatory development, the focus shifts to implementation and refinement. The Upper House vote on the FIEA amendment remains a critical hurdle, and the FSA's finalization of the ETF approval framework will determine when Japanese investors gain access to regulated crypto investment products.

The enduring question is whether Japan's circumscribed tax reform—benefiting only those who use licensed domestic exchanges—will be sufficient to catalyze the Web3 innovation ecosystem, or whether the industry's calls for broader reform encompassing DeFi and staking activities will gain traction in future legislative sessions.