Crypto Assets Have a Place in Diversified Portfolios, According to Japan’s Top Financial Official

Japan’s Finance Minister Backs Crypto as Part of Investment Strategy Amid Debt Concerns

Amid rising concerns over Japan’s growing debt burden and the weakening yen, Finance Minister Katsunobu Kato said on Monday that cryptocurrencies could play a role in a well-diversified investment portfolio.

Speaking at an event in Tokyo, Kato acknowledged the inherent risks of digital assets, noting their high volatility, but emphasized the importance of supporting innovation without overregulation.

“While crypto assets are associated with significant volatility, a properly developed investment environment can make them a viable component of diversified portfolios,” Kato said, according to Bloomberg.

The minister’s remarks come as Japan grapples with a debt-to-GDP ratio surpassing 200%, prompting fears of financial repression—a strategy where governments suppress interest rates or allow inflation to erode the real value of debt. Such conditions often reduce returns on traditional savings and fixed-income investments.

In this context, alternative assets like cryptocurrencies—which offer growth potential and inflation hedging—are gaining traction among investors seeking protection from diminishing real yields.

Kato stressed that the Japanese government aims to foster an environment that nurtures innovation, ensuring the country remains competitive in financial and technological developments while addressing the need for investor protection.