# Japan's Digital Yen Strategy and Liquidity Fragmentation Risk Startale CEO emphasizes the need to connect competing yen stablecoins. - **Source:** [Bitcoin News](https://brifing.si/source/d8aeaf1e-9839-4dad-9d25-7a6bf3fbeef8) - **Published:** 2026-07-23 - **Topic:** [Finance](https://brifing.si/c/finance) - **Original article:** - **On Brifing:** https://brifing.si/s/28365a7e-9533-4978-962f-faca09d92a84 ## Japan's Digital Yen Strategy Japan aims to expand its blockchain ecosystem by launching corporate and fiat-backed digital yen assets. However, these assets remaining isolated risks liquidity fragmentation. Startale CEO Sota Watanabe calls for regulated access to open infrastructure to mitigate this risk. ## Impact of Tax Policies Japan's 55% tax rate on DeFi yields could drive local liquidity offshore. Watanabe advocates for lowering this rate. The Japan Blockchain Association (JBA) plans to extend the 20% tax on spot crypto assets to staking and on-chain yields. ## Staking as Infrastructure Watanabe stresses that DeFi yields and staking are not merely speculative. In proof-of-stake systems, these activities are vital for consensus and network security. High tax rates penalize participants providing this infrastructure. ## Risk of Liquidity Drain Heavy tax burdens on on-chain activities may push local capital abroad. Watanabe warns this would harm users, startups, and Japan's position in the global digital economy. Liquidity loss could weaken local markets. ## Corporate Yen Stablecoins Major financial groups like MUFG, SMBC, and SBI are preparing to issue regulated fiat-backed yen stablecoins. Watanabe highlights that limiting these to closed environments would restrict their potential, emphasizing programmable and interoperable liquidity. ## Solution to Fragmentation Isolating liquidity pools of different stablecoins could replicate traditional banking issues. Watanabe explains the importance of unifying competing stablecoins using interoperable layers like Soneium. Users shouldn't need to manage multiple digital yen versions. ## 2026 Goal and Global Impact Startale aims to unify competing yen stablecoins by 2026 to power enterprise Web3 applications. This move could bolster Japan's strategy as a digital asset hub. Open infrastructure and regulated access may strengthen Japan's role in global liquidity flows. ## Sources covering this story - https://news.bitcoin.com/startale-ceo-says-japan-must-connect-competing-yen-stablecoins-or-risk-fragmentation/ — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._