Prime Minister Sanae Takaichi secured a historic mandate in Sunday’s snap election, with her Liberal Democratic Party (LDP) capturing 316 lower house seats, a supermajority that clears the legislative runway for Japan’s aggressive pro-Web3 agenda. Markets reacted instantly: the Nikkei 225 surged to a record 47,734, while BTC/JPY pairs traded at a 5% premium against global spot prices.
The End of 'Miscellaneous Income'
For crypto investors, the supermajority matters for one specific statute: the Financial Services Agency (FSA) is now expected to fast-track the reclassification of digital assets from "miscellaneous income" to "financial products."
Under current law, Japanese traders face a progressive tax rate of up to 55% on crypto gains. The proposed reform, championed by Takaichi’s administration, would harmonize this with the flat 20% rate applied to equities. This discrepancy has long been cited as the primary driver of capital flight from Japanese exchanges to offshore entities.
The LDP’s 316-seat hold allows the coalition to override Upper House objections, effectively guaranteeing the passage of the 2026 tax reform package.
The 'Takaichi Trade' & Market Structure
Institutional desks are already positioning for the "Takaichi Trade", a macro rotation that could see capital flow from U.S. ETFs back into domestic Japanese bonds (JGBs) and equities. While this strengthens the Yen, the correlation between Takaichi’s deregulation stance and crypto adoption has decoupled Bitcoin from traditional currency headwinds in Tokyo trading hours.
Takaichi is no stranger to the asset class. As Minister of Internal Affairs in 2019, she publicly clarified that cryptocurrency donations to politicians were legal and exempt from the Political Funds Control Act’s disclosure rules, a stance that established her reputation as one of the few G7 leaders capable of distinguishing between settlement layers and securities.
What to Watch
The FSA is expected to submit the formal reclassification bill during the upcoming Diet session. Traders should monitor the specific language regarding "loss carryovers" (currently allowed for stocks for three years), which would be the final signal that Japan is ready to onboard institutional liquidity.
