Japan, long known for its attachment to cash, is rapidly embracing a digital future. The country’s central bank, the Bank of Japan (BOJ), is now openly considering the role of cryptocurrencies and a potential digital yen as part of its evolving payment landscape. This shift is not just about technology—it’s about redefining how money moves in one of the world’s largest economies.
Cashless Momentum Accelerates
In 2024, cashless payments in Japan soared to 42,8% of all transactions, nearly tripling from just over 13% in 2010. The government’s official target of 40% was reached a year ahead of schedule, signaling a dramatic change in consumer behavior and business practices. While physical yen remains in circulation, BOJ officials acknowledge that “usage of notes could fall significantly in the future amid rapid digitalisation”.
Digital Yen Pilot and Crypto’s Growing Role
The BOJ launched a digital yen pilot in 2023, collaborating with major banks and fintech firms. While there’s no official launch date for a central bank digital currency (CBDC), the pilot is running at full speed. The central bank’s leadership is clear: the retail payment system must remain “convenient, efficient, accessible universally, while being safe and resilient”.
At the same time, cryptocurrencies are gaining traction. As of December 2024, Japan had over seven million active crypto accounts, up from five million earlier that year. Bitcoin and Ethereum are the most popular, but stablecoins pegged to the yen or dollar are also making inroads, especially in cross-border commerce and remittances 2.
Regulatory Evolution: Crypto as Financial Products
Japan’s regulatory approach is also evolving. By 2026, the Financial Services Agency (FSA) plans to reclassify crypto assets as financial products under the Financial Instruments and Exchange Act. This move will place cryptocurrencies under the same regulatory framework as stocks and bonds, introducing stricter oversight and insider trading rules 2 3. The shift reflects Japan’s recognition of crypto’s growing influence—not just as a payment tool, but as a legitimate investment class.
Central Bank Perspective: Stability and Trust
BOJ officials remain cautious. Deputy Governor Shinichi Uchida recently warned that if the central bank fails to maintain price stability, public trust in the yen could erode, potentially opening the door for cryptocurrencies or stablecoins to fill the gap 1. While cash is not expected to disappear soon, the fact that such scenarios are being discussed at the highest levels marks a significant change in tone.
What’s Next for Japan’s Payment Future?
Japan’s journey toward a post-cash economy is accelerating, driven by consumer demand, regulatory innovation, and global competition. The digital yen pilot and the growing acceptance of crypto assets suggest a future where digital payments—whether through CBDCs, stablecoins, or decentralized cryptocurrencies—play a central role in everyday life.
For now, Japan is preparing for all possibilities, ensuring its financial infrastructure remains robust, innovative, and globally competitive 2 3.
