Japan continues its preparations for the launch of crypto asset index investment funds (ETFs) in coordination with securities laws and tax regulations by 2028. If approved by the authorities, crypto ETFs will enable individual and institutional investors in Japan to more easily access crypto assets through their existing securities accounts. Currently, investors in the country have to deal with relatively complex processes such as opening accounts on exchanges and digital wallet management to access crypto.
Increased Interest in Crypto ETFs
Following the introduction of Bitcoin ETFs in the United States at the beginning of 2024, expectations for similar steps to be taken in Japan have increased. Approximately $130 billion worth of assets are managed in the US market, and these products also attract interest from pension funds and universities. Convano Consulting Director Motoyuki Azuma, whose views on the subject were included, stated that Japanese investors may be skeptical about the inclusion of crypto assets in portfolios.
“Many Japanese investors may question the reliability of holding Bitcoin in our portfolio. ETFs bring formality and trust to crypto investments, making them easier to explain,” he said.
According to a survey conducted by Laser Digital Holdings in 2024, 54 percent of institutional investors in the country said they planned to invest in crypto assets in the next three years. However, Azuma also noted that short-term investment strategies have become difficult in current market conditions.
“Strategies based on Bitcoin’s Net Asset Value are now more difficult, but crypto ETFs will be much easier under a long-term alternative asset plan,” he said.
Regulatory Barriers and Security Criteria
In order for crypto ETFs to be launched in Japan, approval from the Tokyo Stock Exchange and an amendment to the Investment Fund Law are required. With this change, crypto assets will be included in the “specified assets” category. However, regulators are focusing more on retention and customer protection standards, especially due to security breaches in recent years.
In 2024, $306 million worth of Bitcoin was lost in a security breach on a local crypto platform. This required regulators to take stringent measures. Authorities aim to recognize crypto assets as financial instruments with the legal regulation planned to be made in 2026.
The Role of Tax and Financial Institutions
In Japan, crypto income is currently taxed at rates of up to 55 percent under “miscellaneous income.” The government’s 2026 tax reform envisages a 20 percent flat tax for certain crypto assets, similar to stocks. It is evaluated that this change may increase interest in crypto investment for both individual and institutional investors.
Major financial institutions in the country are also closely following the developments in the crypto ETF field. Organizations under the umbrella of Nomura Asset Management, SBI Global Asset Management, Daiwa Asset Management and Mitsubishi UFJ group are working on the development of potential products. It was reported that SBI Holdings is planning to launch an ETF product that tracks Bitcoin and XRP.
Tomohiko Kondo, President of SBI VC Trade, a subsidiary of SBI Holdings, stated in his statement in January that crypto assets go beyond just buying and selling transactions, and that different opportunities are offered to investors through fund income and various strategies.
Hajime Ikeda, Senior General Manager of Nomura Holdings, argued that it is not possible to launch crypto ETFs immediately after the law change. Ikeda stated that rushing out products without general clarity on practical issues such as customer information protocols and security could be risky.
