XRP's Japan Win: 20% Tax Could Cement Dominance

XRP's Japan Win: How a 20% Tax Rate Could Cement its Crypto Dominance

Japan is rapidly positioning itself as a leading global hub for digital asset adoption, and a recent series of policy changes is poised to unlock significant institutional investment. Finance Minister Satsuki Katayama’s declaration of 2026 as a “digital year” signals a clear intent to integrate cryptoassets into mainstream financial channels, mirroring the success of US spot Bitcoin ETFs. But beneath the surface of these broad reforms lies a compelling narrative: XRP is uniquely positioned to capitalize on this shift, thanks to its existing infrastructure and strategic partnerships within the Japanese market.

The Policy Stack: A Pro-Crypto Revolution

Japan’s Financial Services Agency (FSA) is enacting a comprehensive overhaul of its crypto regulatory framework. This isn’t a minor tweak; it’s a fundamental restructuring designed to attract institutional capital and foster innovation. Key components of this “policy stack” include:

• Asset Reclassification: 105 major cryptoassets are being reclassified as “financial products” under the Financial Instruments and Exchange Act (FIEA), moving them out of the lighter Payment Services Act regime. This triggers issuer-style disclosure requirements, volatility and blockchain risk reporting, and insider trading restrictions.
• Tax Cuts: The effective tax rate on eligible crypto income is being slashed from as high as 55% to a flat 20%, aligning it with stock investments.
• Stablecoin Licensing: Japan has already licensed its first yen-pegged stablecoin, JPYC, and is exploring ways to allow local banks to trade cryptocurrencies.
• Bank & Securities Participation: The FSA is actively working to enable banks and securities firms to directly offer crypto dealing, custody, and related services.

These changes collectively create a clear regulatory pathway for institutional crypto exposure in Asia, making Japan a particularly attractive destination for global investors.

Why XRP is at the Center of Japan’s Crypto Strategy

While the policy changes benefit a range of cryptoassets, XRP appears to be uniquely positioned to benefit. This isn’t accidental; it’s a result of strategic partnerships and existing infrastructure.

The JPY On-Ramp Dominance

Chainalysis data reveals a striking trend: from July 2024 to June 2025, the vast majority of JPY purchases on centralized exchanges went into XRP. Approximately $21.7 billion in XRP was bought, compared to roughly $4.7 billion in BTC and $2 billion in ADA. This demonstrates a clear preference for XRP among Japanese investors, particularly when converting fiat currency.

Ripple and SBI Holdings: A Powerful Partnership

The dominance of XRP is largely attributed to its strong relationship with SBI Holdings, a major Japanese financial services company. SBI Remit, a subsidiary of SBI Holdings, has been using Ripple's payment technology since 2017. In 2021, it became the first Japanese remittance provider to use XRP as a bridge asset for Japan-Philippines transfers. This model has since expanded to include remittances to Vietnam and Indonesia, establishing real-world utility for XRP within key Asian corridors.

Stablecoin Integration and the RLUSD Launch

Ripple’s influence extends to the stablecoin space. In August 2025, Ripple and SBI signed a memorandum of understanding for SBI VC Trade to distribute Ripple’s RLUSD stablecoin domestically. SBI VC Trade holds Japan's Electronic Payment Instruments Exchange Service Provider license, further solidifying Ripple’s position within the regulated Japanese market.

The Bitcoin-XRP ETF: A Game Changer

SBI is also planning to launch Japan’s first dual-asset crypto ETF, pairing Bitcoin and XRP. This ETF, slated to list on the Tokyo Stock Exchange, is a direct response to the FSA’s reclassification of cryptoassets and is designed to provide institutional investors with regulated exposure to both leading cryptocurrencies. The inclusion of XRP alongside Bitcoin in this product is a significant endorsement of its potential.

The Institutional Gap and Japan’s Opportunity

Despite relatively high overall crypto adoption (ranking 19th worldwide in Chainalysis’ 2025 Global Crypto Adoption Index), Japan lags behind in institutional participation (27th in the “institutional centralized service value received” sub-index). This gap represents a significant opportunity for growth, and the FSA’s reforms are specifically designed to address it.

The new regulations will unlock the existing machinery of Japanese finance – securities firms, banks’ securities arms, and exchange-listed products – allowing institutional investors to access cryptoassets through familiar and regulated channels. Nomura Research Institute has outlined potential products, including investment trusts holding spot crypto, futures-based crypto funds, and cross-listings of US ETFs.

How Exposure Will Reach Investors

Once the FSA’s proposals are enacted, the 105 reclassified cryptoassets will fall under FIEA, subjecting them to the same disclosure, insider-trading controls, and product-governance rules as traditional securities. This will facilitate the creation of:

• Exchange-Listed Products: ETFs and other exchange-traded products offering exposure to cryptoassets.
• Investment Trusts: Funds that hold cryptoassets directly.
• Structured Notes: Complex financial instruments linked to the performance of cryptoassets.

This framework will allow JPY savings and corporate cash to flow into regulated crypto exposure through established financial institutions.

The Microstructure Impact: Increased JPY/XRP Liquidity

The immediate impact of these changes is likely to be increased liquidity in JPY spot markets. Tax cuts and the move into the securities law framework will make it easier for brokers and wealth managers to recommend regulated crypto products. For XRP, which already dominates JPY fiat on-ramp volume, this translates to higher daily JPY/XRP traded volume, deeper order books, and tighter spreads.

Furthermore, the expansion of remittance corridors using XRP and the potential adoption of yen-backed stablecoins will strengthen XRP’s role as a bridge currency for regional payments, creating a persistent two-way flow of liquidity.

Upside Potential and Remaining Caveats

Japan’s proactive approach to crypto regulation, coupled with XRP’s unique position within the Japanese market, presents a compelling investment opportunity. However, it’s important to acknowledge the remaining caveats:

• ETF Approval: No crypto ETFs have been approved yet.
• FSA Endorsement: The FSA hasn’t publicly named XRP as a preferred asset.
• Stablecoin Competition: The liberalization of stablecoins could dilute XRP’s dominance in JPY flows as USDC and JPYC become more widely available.

Despite these uncertainties, if Japan’s “digital year” successfully integrates regulated exchanges and ETF wrappers into the crypto access landscape, XRP is poised to be a major beneficiary. Its existing policy alignment, real-world utility, and inclusion in proposed ETF structures give it a significant advantage over most other tokens.

The institutional gap identified by Chainalysis represents the space these reforms are designed to fill. When that gap closes, the assets already embedded within Japan’s regulated financial plumbing, already facilitating real money movement across the region, and already featured in proposed ETF structures will be best positioned for success. XRP fits that description in a way few other cryptocurrencies do.

Mentioned in this article XRP Cardano Bitcoin Ripple USD USDC Chainalysis Elliptic Ripple