Startale CEO urges interoperability for Japan’s yen stablecoins

Startale CEO Sota Watanabe recently urged Japan to connect competing fiat-backed yen stablecoins through interoperable rails such as Soneium to prevent domestic liquidity from fragmenting into closed pools.

He made the remarks during a discussion on Japan’s digital-asset policy, arguing that multiple corporate and bank-backed yen tokens could become isolated unless they share common infrastructure.

Describing potential uses for on-chain yen, Watanabe noted that regulated, programmable yen on public Web3 networks could support payments, treasury operations, remittances and tokenized assets while keeping liquidity usable beyond issuer-specific ecosystems.

Under the Financial Instruments and Exchange Act, designated spot crypto assets face a 20% flat capital-gains tax. Decentralized finance yields, staking rewards and other on-chain returns remain taxed as miscellaneous income at progressive rates that can reach about 55%.

Watanabe, a board member of the Japan Blockchain Association, told policymakers that treating staking and DeFi yields as ordinary speculative income misreads their technical role in proof-of-stake networks and liquidity pools.

He warned: “If users and builders face uncertainty or very high tax burdens on normal on‑chain activity, liquidity will move offshore.”

Major financial groups including MUFG, SMBC and SBI are moving toward issuing fiat-backed yen stablecoins under Japan’s revised framework. The rules allow issuance via trust banks, electronic payment institutions and other paths, which has encouraged several consortia to develop competing products.

Startale plans to layer interoperability on top of issuers’ choices rather than impose a single ledger. The company aims to use its Soneium architecture to unify liquidity between different yen stablecoins and support enterprise Web3 execution targeted around 2026.

Watanabe called for “regulated access to open infrastructure”, saying compliance checks can be embedded at smart-contract boundaries so issuers remain compliant without locking assets inside closed systems.

The Japan Blockchain Association is seeking tax changes to treat staking and on‑chain yields differently from miscellaneous income, aiming to align those returns with the 20% treatment applied to spot holdings.

Watanabe described spot ETFs as a way to normalize crypto exposure for traditional investors and provide regulated custody, but he added that passive funds alone are unlikely to drive venture funding for early-stage Web3 teams.

On competition among issuers, he rejected a winner-take-all outcome and noted that different issuers may serve distinct use cases, while warning that diversity without interoperability could recreate fragmentation and force users to manage multiple redemption paths.

Startale and other participants expect a phased rollout as compliance standards, identity primitives and cross-chain messaging mature. Watanabe outlined an agenda of tax clarification for staking and DeFi yields, interoperable liquidity layers for competing issuers, and measures to allow venture funding of native projects.