Boon For Crypto Markets, Risk Assets

Japan’s newly elected prime minister, Sanae Takaichi, may bring fresh political momentum for risk assets, including cryptocurrencies, as her victory drove the country’s benchmark Nikkei index to an all-time high.

Japan’s Nikkei index rose 4.75% on Monday to a new all-time high close of 47,734.04, according to TradingView. The rally followed Takaichi’s election on Saturday, setting her up to become Japan’s first female prime minister when she takes office on Oct. 15.

Takaichi is widely regarded as pro-growth, supporting low interest rates, tax cuts and large-scale economic stimulus. Her stance has been well received by voters facing a weakening yen. During the campaign, she was the only candidate proposing both a major spending package and looser monetary policy.

While Takaichi has yet to make a statement on Bitcoin (BTC), she signaled an innovation-friendly stance toward cryptocurrency during her tenure as minister for internal affairs and communications. 

In 2019, she supported the legality of crypto donations to individual politicians, stating that cryptocurrency donations were not subject to the same disclosures as cash or securities donations under Japan’s Political Funds Control Act.

Meanwhile, traders are increasingly seeking a store of value beyond the US dollar amid the US government’s first shutdown since 2018, leading to a surge of capital into gold and Bitcoin.

Bitcoin set a new all-time high above $125,700 on Sunday, with analysts pointing to macroeconomic tailwinds, including the US government shutdown.

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“Iron Lady” Takaichi may boost crypto investor sentiment in Japan

The election of Takaichi may lead to a renewed demand for digital assets among Japanese investors, according to Charles d’Haussy, CEO of the dYdX Foundation, the nonprofit organization behind the decentralized trading protocol dYdX:

“‘Iron Lady Sanae Takaichi’s election as Japan’s PM is boosting crypto sentiment among local investors through expected looser monetary policies that have already driven Bitcoin to a record high against the yen […].”

Beyond markets, her “supportive regulatory approach” may bring more regulatory clarity and spur digital asset adoption in the country, added d’Haussy. 

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Before the election, Japanese regulatory agencies had been exploring more crypto-friendly frameworks as part of former Prime Minister Fumio Kishida’s “New Capitalism” strategy, aiming to stimulate Japan’s investment landscape.

In June, Japan’s Financial Services Agency (FSA) proposed a significant reclassification of cryptocurrencies that would pave the way for launching crypto exchange-traded funds (ETFs) and introduce a 20% tax on digital asset income in the country, Cointelegraph reported.

The proposal suggests recognizing crypto as “financial products” under the scope of the Financial Instruments and Exchange Act (FIEA), the same regulatory framework that governs securities and traditional financial products.

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