Japan’s Sanae Takaichi Wins Historic Election, Sparks Market Rally and Crypto Tax Reform Hopes

Japan’s Prime Minister Sanae Takaichi has secured a historic landslide victory in the February 8, 2026, snap parliamentary elections, cementing her authority and setting the stage for sweeping economic and regulatory reforms. Her Liberal Democratic Party (LDP) is projected to win between 274 and 326 of the 465 seats in the lower house, marking the largest post-war electoral margin ever achieved by a Japanese party. The result has reinforced Takaichi’s reputation as Japan’s “Iron Lady” and strengthened expectations for a pro-growth policy agenda.

Financial markets reacted quickly to the decisive outcome. The USD/JPY pair rose around 0.2% to 157, while Bitcoin surged nearly 5% against the yen, reflecting growing investor confidence in what has been dubbed the “Takaichi trade.” Japanese equities climbed to record highs, driven by expectations of fiscal stimulus, accommodative monetary policy, and increased liquidity, while government bonds and the yen faced renewed pressure.

International reactions also underscored the significance of the election. US Treasury Secretary Scott Bessent described the victory as “historic,” emphasizing the resilience of US-Japan relations under Takaichi’s leadership. President Donald Trump had earlier offered a strong endorsement, praising her leadership and recent achievements in trade and security. Takaichi, in response, reaffirmed the importance of the US-Japan alliance and confirmed plans to visit the White House in spring 2026.

Beyond markets and geopolitics, Takaichi’s mandate is widely seen as a potential turning point for Japan’s crypto and blockchain sector. Japan currently taxes crypto gains as miscellaneous income at rates of up to 55%, a structure that has pushed some investors overseas despite the country’s advanced blockchain ecosystem. Proposed reforms for fiscal year 2026 include lowering the crypto tax rate to around 20%, allowing three-year loss carryforwards, and reclassifying certain digital assets as financial products. While crypto was not a central campaign issue, Takaichi’s aggressive fiscal stance, inspired by Abenomics, could create a more favorable environment for Bitcoin, Ethereum, and Web3 innovation.

Challenges remain, particularly Japan’s debt burden, which exceeds 250% of GDP, and rising government bond yields. Still, with strong political backing and ongoing Financial Services Agency proposals, Takaichi’s victory may mark the beginning of a more crypto-friendly and innovation-driven era for Japan.