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The Orange Envelope: Bitcoin DeFi Surges as Japan Nears Mainstream Crypto Adoption

December 04, 2025 • Reading Time: 9 minutes

Read this newsletter in Korean (한국어) | Japanese (日本語) | Chinese (中文)

As 2025 draws to a close, crypto markets across APAC and MENA are buzzing. Bitcoin’s recent swings highlight ongoing volatility, but institutional adoption keeps gaining momentum. Financial institutions are expanding their crypto offerings, with ETFs, Digital Asset Treasuries (DATs), and new yield strategies gaining traction. Globally, Vanguard has enabled trading on third-party crypto ETFs, Bank of America suggested up to 4% crypto allocations for wealth-management clients, and JPMorgan continues backing tokenization.

M&A activity is also picking up. The largest confirmed deal of 2025 — South Korea’s payment giant Naver merging with leading exchange Upbit (Dunamu) — could create new crypto on-ramps across Naver’s e-commerce ecosystem. This transaction may kick off a broader wave of consolidation across the region in 2026, signaling growing confidence in digital payments and crypto infrastructure.

Amid these market shifts, Stacks is uniquely positioned to capture institutional and retail flows on Bitcoin Layer 2. With Dual Stacking now live, BTC holders can earn enhanced yields while activating sBTC for DeFi. This creates productive pathways for Bitcoin that align with rising institutional demand and positions Stacks as both a barometer and enabler of the region’s evolving crypto ecosystem.

These developments set the stage for the sections ahead: Japan’s evolving regulatory landscape, the rise of stablecoins as a growing payment tool, and Stacks’ latest innovations to catalyze Bitcoin DeFi.

🔍 In Focus: Key Trends Shaping BTCFi in Asia

Each edition, we’ll take a deeper look at the promising drivers of Bitcoin Layer 2 adoption. In this issue, we explore Japan’s regulatory momentum, the rise of stablecoins, and the latest milestones from Stacks.

🇯🇵 Japan’s Next Chapter: Toward a Regulated Investment Ecosystem

After years of playing defense, Japan is shaping a framework designed to bring builders, investors, and institutions back to the country. The direction is clear: Japan wants a mature, investment-grade crypto market that can compete with Singapore, Hong Kong, and the UAE.

The cornerstone of this shift is the Financial Services Agency (FSA)’s plan to reclassify 105 major cryptocurrencies as financial products. This change would enable new institutional offerings such as ETFs, structured notes, and derivatives, while elevating crypto from a settlement tool to a recognized part of Japan’s broader capital markets.

Regulators are introducing stricter rules for market integrity, including proposals for flat 20% capital gains tax, enhanced oversight of insider trading, token due diligence, and raised listing standards across exchanges. Together, these measures aim to create a more credible and transparent market.

On the institutional side, Japan is considering allowing banks and their securities arms to offer crypto trading and custody services, expanding access for both retail and institutions. In parallel, the FSA is backing a stablecoin initiative involving Japan’s three megabanks (MUFG, SMBC, Mizuho) to issue a joint stablecoin and integrate it into their financial frameworks.

Japan has signaled its strong interest in integrating digital assets into mainstream finance. If the reforms proceed as planned, they could catalyze the adoption of digital assets by one of the world’s wealthiest populations.

💰 Stablecoins Leading the Digital Payment Revolution

Stablecoins proved to be a vital bridge between traditional finance and crypto in 2025—and they are poised to dominate digital payments across APAC and MENA in 2026. The region has witnessed a surge of regulatory pilots and private initiatives, all signaling that stablecoins will play a central role in the next stage of the crypto market.

  • Japan: Approved its first yen-backed stablecoin (JPYC), with Sony and the country’s three megabanks preparing pilots.

  • Kazakhstan: Launched its first stablecoin pilot.

  • Pakistan: Exploring its first stablecoin.

  • Turkey: Leads MENA with over $200B in annual transactions.

  • South Korea & Hong Kong: Ongoing efforts to introduce a won-backed stablecoin, with companies such as Standard Chartered and Animoca Brands applying for stablecoin issuer licenses.

These regulatory pilots and quickly evolving frameworks indicate that stablecoins will be the leading theme for digital payments in 2026.

🚀 Stacks Accelerates Bitcoin DeFi Momentum in Q4 2025

Stacks is kicking off the final quarter of 2025 at full speed, with Dual Stacking and USDC-backed stablecoins powering new yield and liquidity opportunities.

Dual Stacking: Unlocking Enhanced Yields for BTC Holders

With the release of Dual Stacking, BTC holders can now not only earn yield on their sBTC, but also boost their BTC-denominated returns by simultaneously stacking STX. The more STX you stack, the higher your yield on sBTC, currently reaching up to ~6% APY. Your STX stack continues to earn 8–9% APY in BTC rewards. 

Both yields are powered by Stacks’ Proof of Transfer (PoX) consensus mechanism, which has been securing the network since 2021. In this first version of Dual Stacking, users can further enhance sBTC yields by deploying capital into DeFi protocols.

→ Start boosting your BTC yields: https://app.stacks.co/

Circle xReserve Integration: Bridging Stablecoin Liquidity

Stacks has partnered with Circle to introduce seamless USDC-backed stablecoins to the network. Through xReserve, Circle’s new interoperability infrastructure, these stablecoins are fully interoperable with native USDC across supported chains. This integration ensures frictionless user experiences and unified liquidity, powered by Circle’s advanced bridging technology. This means Bitcoin liquidity on Stacks is more flexible, interoperable, and ready for DeFi and yield strategies across multiple chains.

→ Learn more about the partnership here

Together, these two releases represent a significant step forward for Bitcoin DeFi on Stacks, establishing the foundation for enhanced liquidity and expanded yield-generating opportunities.

📰  In The News:

📅 Upcoming Events:

As the Bitcoin ecosystem continues to expand across Asia, major events are bringing together key players to discuss adoption, infrastructure, and Bitcoin’s evolving role in global finance. Here’s what’s ahead:

Want More? Follow Stacks & Stacks Asia on X.

Explore all upcoming Stacks events & hackathons: Calendar

Disclaimer: Any information, links, or views expressed here are the writer's opinions and are not financial advice. They should not form the basis for making investment decisions nor be interpreted as a recommendation or advice to engage in investment transactions. Please do your own research.