Japan's Ruling LDP Declares "the Eve of a Cyber Emergency" — Crypto Tracing, Post-Quantum Cryptography and Decentralized ID Enter the National Security Agenda

What the proposal is

The full title translates as "Recommendations for a Fundamental Strengthening of Cybersecurity — The Eve of a Cyber Emergency: Prepare for AI Cyber-Saturation Attacks!" The headquarters finalized it on October 20; it became official party policy on October 22 and was delivered to the prime minister on October 23. It describes the current wave of corporate cyberattacks and large-scale personal-data leaks as "the eve of a cyber emergency" and expresses alarm that AI is making attacks more autonomous and sophisticated. It asks the government to adopt a command structure under the new headquarters and urges executives of listed companies to build preparedness in peacetime.

Countering AI-driven attacks

In the section addressed to the National Cybersecurity Office (NCO), the proposal labels the risk of next-generation AI models being misused to automate and escalate attacks the "Mythos problem." In response, it promotes "Project YATA-Shield," under which defenders would also use AI to find and fix vulnerabilities early, in cooperation with Japan's AI Safety Institute (AISI). It also calls for a direct liaison channel with major US AI companies. The next day, Minister of Economy, Trade and Industry Ryosei Akazawa announced that an "off-white hacker" team, taking the attacker's perspective, would be set up at the Information-technology Promotion Agency (IPA) in November — consistent with the broader government direction.

Crypto: the National Police Agency is told to trace

Crypto assets appear directly in the section for the National Police Agency. The agency is asked to take a leading role in international joint investigations with the FBI, Europol and others, to neutralize criminal infrastructure, and to actively trace illicitly obtained crypto assets. The aim is deterrence: showing that attacks on Japan do not pay.

Post-quantum cryptography: "early deadlines" for government

The NCO is asked to speed up the migration to PQC. Noting that major Western countries are expected to migrate high-impact systems by around 2030–31, the proposal says the Japanese government should set early deadlines for its own high-priority systems. The Ministry of Internal Affairs and Communications is asked to deploy quantum key distribution (QKD) together with PQC as a dual layer of protection. Today's public-key cryptography could be broken by future quantum computers, and blockchain digital signatures, including Bitcoin's, face the same issue.

Digital Agency: DID/VC and My Number Cards

The proposal asks the Digital Agency to test the usefulness of DID and VC as a "trust infrastructure for the Web3 era" that resists data leaks and tampering. With IC-chip reading becoming the norm for identity verification under the Act on Prevention of Transfer of Criminal Proceeds and related laws from April 2027, it also calls for faster private-sector use of My Number Cards and for considering making the card mandatory. On October 9 the FSA, after leaks of ID-document images, asked financial institutions, including crypto exchanges, to bring forward the move to IC-chip reading. The shift from document images to signed attributes is now explicit in policy.

FSA: execute existing requests

The FSA and others are asked to ensure that financial institutions, with senior-management involvement, carry out the "short-term actions" in the agency's May 22 request letter, and to strengthen cross-industry cyber exercises and threat-information sharing through Financial ISAC Japan.

[Business Development Insights]

1. Once PQC deadlines are set, financial institutions and Web3 operators will need to inventory where and which cryptography they use — custody keys, validator signing keys, API authentication and electronic signatures. Infrastructure without crypto-agility (the ability to swap algorithms) will face rising migration costs. The cheapest time to take inventory is before any deadline is announced.
2. As IC-chip reading of My Number Cards connects with DID/VC, identity verification will move toward reusing already-verified attributes with signatures. Collecting document images for every new account will become a liability in both leak risk and cost, opening business opportunities in KYC reuse and attribute-attestation brokering.
3. As the state takes on crypto tracing in earnest, exchanges and wallet providers will be held to operational standards for law-enforcement requests, freeze cooperation and preservation of on-chain analytics evidence. A well-run interface with law enforcement will become a source of trust and competitive advantage for licensed operators.

[Sources]

Official website of Rep. Masaaki Taira (Oct 22, 2026) https://www.taira-m.jp/2026/10/post-372.html Liberal Democratic Party, submission to the Prime Minister (Oct 23, 2026) https://www.jimin.jp/news/policy/214454.html Liberal Democratic Party, proposal finalized (Oct 21, 2026) https://www.jimin.jp/news/information/214417.html CoinPost https://coinpost.jp/?p=744293 New Economy (Gentosha) https://www.neweconomy.jp/posts/619956 NADA NEWS https://nadanews.com/387367 New Economy, METI "off-white hacker" team https://www.neweconomy.jp/posts/619915 CoinPost, FSA request on IC-chip reading https://coinpost.jp/?p=742056