It is estimated that spot Bitcoin ETFs in Japan could reach a size of $18.4 billion, approximately 3 trillion yen, by fiscal year 2028. The analysis made by XWIN, at a time when preparations for the implementation of these products were gaining momentum in the country, reveals that the prediction in question is not an ambitious scenario, but a calculation compatible with economic data.
Household savings come to the fore
The projected inflow of $18.4 billion represents only 0.13% of the $14.6 trillion in total savings held by Japanese households. Considering these savings, a significant portion of which has been kept in bank deposits for a long time, it seems that the amount expected to go towards spot Bitcoin ETFs remains limited. Compared to Japan’s stock mutual fund market, this size remains at approximately 1%.
Analysts assess that this flow of funds could come from three main sources. The first group includes individual investors. This segment will be able to access Bitcoin through their familiar investment practices and NISA accounts that offer tax advantages, without dealing with complex crypto exchanges.
If the tax regulation is implemented, the 55% tax rate applied to crypto income is expected to decrease to the standard 20% level.
Institutional investor interest may increase
The second source is more cautious corporate capital. Bitcoin’s low correlation with the US dollar has led some Japanese pension funds to consider the asset as an inflation hedge. The National Business Pension Fund in Okayama became one of the notable examples in this field by allocating the top 1% of its assets to the crypto sector.
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Finance giants await regulatory steps
The third element is Japan’s large financial institutions. SBI Holdings had earlier mooted the proposal to launch various ETF products, including a binary fund based on Bitcoin and XRP. The company aims to reach 5 trillion yen in assets under management in just three years. If this pace is maintained, it may be possible to reach the countrywide market size of $18.4 billion before 2028.
SBI Holdings aims to reach 5 trillion yen in assets under management within three years with a range of ETF products, including a Bitcoin and XRP-based binary fund.
The main developments that the market will focus on in the coming months will be the official adoption of amendments to the Financial Instruments and Exchange Act and the first applications that issuers will make to the Financial Services Agency. How quickly the funds will grow after regulatory approval will depend on two main factors.
The first of these is how quickly brokerage firms can integrate crypto assets into applications used by a wide range of investors. The second element is whether the proposal to reduce the tax rate on crypto income to 20% will receive final approval. If the Tokyo administration moves the process forward without bureaucratic delays, a regulated crypto hub that can compete more strongly with the US market could emerge in Asia.
