Japan’s Push for Bitcoin and Ethereum ETFs Gains Momentum

In a recent initiative aimed at enhancing the development of cryptocurrency investment products in Japan, a coalition of local companies has suggested that any forthcoming exchange-traded funds (ETFs) in the country should concentrate on Bitcoin (BTC) and Ethereum (ETH).

This suggestion arises as Japan contemplates whether to follow in the footsteps of the US and other countries that have already greenlighted crypto-backed ETFs.

The Effort for Crypto ETF Endorsement

It is well-known that the recent launch of crypto ETFs in the US and other key nations such as Hong Kong is considered a significant achievement for the digital asset sector, coming after years of regulatory opposition.

While these countries have welcomed crypto ETFs, Japan has approached this subject with caution, as officials from the Financial Services Agency (FSA) have previously voiced concerns regarding the benefits of these investment vehicles.

However, as of October 25, a specific group, including leading financial institutions, seems to be advocating for the country’s regulator to prioritize Bitcoin and Ethereum ETFs, citing their “market value and long-term performance,” which makes them “suitable” for wealth accumulation over medium to long-term periods.

Notably, the group’s proposal emphasizes the reliability associated with Bitcoin and Ethereum, referencing their historical performance and substantial market capitalizations, which are crucial participants in the overall digital currency landscape.

As Japan considers a possible change in its position regarding crypto ETFs, this coalition appears determined to keep the spotlight on established assets like Bitcoin and Ethereum.

Suggestions for Tax Reform and Regulatory Assessment

Alongside urging that Bitcoin and Ethereum take precedence in potential ETF options, the coalition also recommended that Japan reevaluate its tax regulations on cryptocurrency earnings.

The nation’s tax rate on crypto profits can soar to 55%, a figure many believe discourages both individual and institutional investments.

The group proposed that distinguishing the tax on income derived from cryptocurrencies could enhance Japan’s attractiveness as a “competitive” location for digital asset investment.

Prominent members of this coalition include significant entities in Japan’s financial sector, such as Mitsubishi UFJ Trust and Banking Corp., Sumitomo Mitsui Trust Bank Ltd., crypto platform bitFlyer Inc., and brokerages like Nomura Securities Co. and SBI Securities Co.

These institutions, with extensive experience in the industry, have collectively articulated their concerns and recommendations in unison rather than as individual viewpoints.

The coalition’s recommendations arrive at a time when Japan’s digital currency regulatory framework is under rigorous evaluation, and the FSA has confirmed its plans to reassess its regulatory strategies. Nonetheless, this evaluation is anticipated to take considerable time, and the resulting decisions remain uncertain.