TOKYO (Reuters) -From the launch of new products and services in Japan to facilitating leveraged trading bets, crypto exchanges and some financial firms are rushing to cash in on rising investor enthusiasm for digital assets amid hopes of easing regulations.

The recent surge underscores a higher appetite for riskier investments in Japan as inflation outpaces wage growth and overrides a wariness around crypto investments that followed serious security breaches at exchanges in 2014 and 2018.

Japanese investors' crypto assets surpassed a record 5 trillion yen ($33.16 billion) at the end of July, jumping 25% from just a month earlier. The price of bitcoin - the dominant holding - rose only 15% in yen terms over the same period.

Holdings have since dropped marginally to 4.9 trillion yen as of end-September.

Industry players are now positioning for growth to pick up pace. Regulatory changes under discussion could bring in yet more retail investors by potentially cutting tax paid on crypto gains and easing curbs on trading using borrowed money and asset securitisation. 

'CONSIDERABLE OPPORTUNITY'

"There are around three times as many people with securities accounts as crypto accounts, so there's still a considerable opportunity," said Satoshi Hasuo, representative director and executive officer of exchange Coincheck ( CNCK ) .

"Next, we have to think about how we'll win these people over," Hasuo said. 

CJ Fong, Asia Pacific general manager at crypto market maker GSR, said the firm has also been engaged in more talks this year with Japanese exchanges and financial firms, mainly to provide greater liquidity across a spectrum of digital assets.

The burst of activity shows how Japan is re-establishing itself as a major crypto market as industry players capitalise on the boost the industry has had globally under U.S. President Donald Trump.

"The Trump administration has spurred the Japanese government and regulators into adopting a friendlier approach to crypto, so Japan doesn't fall behind," said Noriyuki Hirosue, CEO of exchange Bitbank.

According to a report by crypto data platform Chainalysis, Japan ranked 19th out of the top 20 nations in crypto adoption globally this year. 

NEW PRODUCTS AND ENTRANTS

Established exchanges are developing products and services in anticipation of regulatory changes that would tax digital-asset gains like those of securities and allow crypto investment through products such as ETFs and tax-free investment vehicles.

The Japan Financial Services Agency is refining rule changes, which will then be debated by parliament and, if passed, would come into effect in 2026 or 2027.

A similar overhaul of tax rules around foreign exchange trading in 2012 triggered a boom that saw trading volumes swell about tenfold in the space of 10 years, Bitbank's Hirosue said.

"I think this could hugely expand the market," he added.

In August, Coincheck ( CNCK ) announced a partnership with the crypto assets arm of online marketplace Mercari ( MRCIF ) to offer a wider range of assets to Mercari's ( MRCIF ) more casual customer base.

Mercari ( MRCIF ) introduced simple crypto trading functions to its marketplace buyers and sellers in March 2023 and grew to 3.4 million crypto accounts by July 2025, making up over a quarter of Japan's total of 13.2 million accounts.

Its rapid growth has helped introduce crypto trading to a much larger audience, industry players say.

SBI VC Trade is considering "enhancing leveraged trading services" on the prospect of leverage trading ratios being relaxed from the current two times to about 5-10 times, representative director and president Tomohiko Kondo said.

The firm, the crypto trading arm of conglomerate SBI Holdings ( SBHGF ), also plans to offer lending services in USDC stablecoin and is exploring the launch of crypto ETF products, Kondo said.

Japan's financial regulator is considering allowing members of banking groups to launch cryptocurrency trading services, in a move to expand market access and foster competition, the Nikkei reported in October.

CHASING THE HIGHS

The crypto trading boom in Japan comes as retail investors seek higher returns and diversify away from low-yielding assets like government bonds and bank loans.

"Over 90% of my assets are in cryptocurrency. A diversified portfolio is only worthwhile when you have a big sum of money already," said Umi Soyama, a 27-year-old worker at a Tokyo-based advertising agency and a crypto investor for around two years.

"I want to take on risk now and then. If I build up enough assets I'll diversify into stocks, bonds and gold," Soyama said. 

Other investors have responded to Trump's crypto boosterism. In the month he was elected, SBI VC Trade said it saw account openings grow five times more than usual.

However, crypto assets' wild volatility poses risks to new investors.

"It can go up, go down. People have to understand this kind of movement and if they are to invest it's an alternative investment, not the main play," said Motonobu Matsuo, senior managing director of the Japan Securities Dealers Association.

And with asset prices near all-time highs, some investors are now looking to reduce their holdings.

Kou Okamoto, CFO at a Tokyo-based financial firm, has invested a small proportion of his assets in crypto since 2019. He now primarily owns bitcoin but is considering reducing his exposure to "altcoins" - those other than bitcoin.

"You can't make 100 or 200 times returns on other types of investments and easing regulations would make crypto more attractive, but altcoins are like gambling with slightly better odds than horse racing," Okamoto said.

"I'm considering moving those into more medium-risk, medium-return investments," he said.

($1 = 150.7800 yen)​