Japan’s Finance Chief Says Crypto Can Play a Role in Portfolio Diversification
Japan’s Finance Minister Katsunobu Kato said on Monday that cryptocurrencies may serve as part of a diversified investment portfolio, even as he acknowledged the sector’s volatility.
“Crypto assets carry significant risks due to their high price fluctuations, but with the right investment environment, they can be incorporated into diversified strategies,” Kato said at a Tokyo event, according to Bloomberg.
Kato emphasized the government’s efforts to balance regulation with innovation, noting that excessive oversight could hinder progress in the digital asset space.
His comments come amid heightened concerns over Japan’s fiscal outlook. With a debt-to-GDP ratio exceeding 200%, the country faces growing speculation around potential financial repression measures and further yen depreciation.
Financial repression refers to policies like low real interest rates, inflation targeting, capital controls, and currency weakening—all intended to reduce government debt burdens. These measures often diminish the real returns of traditional assets such as bonds or cash holdings.
In such environments, alternative assets like cryptocurrencies become more appealing to investors seeking protection from inflation and macroeconomic risk. Kato’s remarks suggest growing official recognition of digital assets as legitimate components of broader investment strategies.
