Japan has designated 2026 as the 'Digital Year' to integrate digital assets into traditional financial markets, inspired by U.S. crypto ETFs. The Financial Services Agency (FSA) is reclassifying cryptocurrencies as financial products, paving the way for ETFs, bank trading, and tokenized assets. Finance Minister Satsuki Katayama announced tax cuts and stablecoin approvals to support this transition, aiming to make digital finance a mainstream investment pillar. Katayama emphasized the role of stock and commodity exchanges in expanding access to blockchain-based assets while maintaining market stability. She highlighted the potential for portfolio diversification through digital assets, referencing the success of U.S. crypto ETFs. Asset managers like Nomura and SBI are preparing crypto-integrated investment trusts, pending FSA approval. Regulatory changes over the past year include allowing banks to trade cryptocurrencies and the approval of Japan's first yen-pegged stablecoin, JPYC. The FSA plans to classify major cryptocurrencies as financial products, enhancing transparency and institutional participation. Proposed tax reforms aim to reduce cryptocurrency taxation from 55% to 20% by 2026, aligning with broader economic reforms to address deflation and foster growth.