Crypto Can Play a Role in Diversification, Says Japan’s Finance Chief

Japan’s Finance Minister Sees Role for Crypto in Diversified Portfolios Amid Debt Pressures

Japan’s Finance Minister Katsunobu Kato said Monday that crypto assets could have a place in diversified investment portfolios, acknowledging their volatility but also their growing relevance in modern finance.

“While crypto assets involve high volatility, they can become part of diversified investments if an appropriate environment is in place,” Kato said during a Tokyo event, according to Bloomberg.

Kato also emphasized the importance of fostering innovation without overregulation, signaling a more balanced approach toward digital assets from Japan’s top policymakers.

The remarks come at a time when Japan’s debt-to-GDP ratio has surpassed 200%, raising red flags about potential financial repression and further depreciation of the yen. These macroeconomic risks have increased investor appetite for alternative assets that may offer protection against inflation and currency debasement.

Financial repression refers to government strategies that suppress interest rates, weaken currencies, or use capital controls to reduce public debt burdens. While such policies can stabilize fiscal metrics, they typically erode the real value of traditional savings and bond investments—driving capital into higher-yielding alternatives like cryptocurrencies.

In this environment, digital assets are increasingly viewed not just as speculative tools but as potential hedges against macroeconomic instability. Kato’s acknowledgment reflects a broader shift in sentiment, as governments and institutions explore crypto’s role in the future of global finance.